FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- The following annual costs are associated with three new extruder machines being considered for use in a Styrofoam cup plant: Data Useful Life, Years First Cost Salvage Value Annual Benefit M&O M&O Gradient X 17 $2,090,000 $87,000 $396,000 $56,000 $9,000 X-TRUD 13 $2,610,000 $93,000 $534,000 $60,000 $11,000 SUPR-X 11 $2,430,000 $119,000 $638,000 $53,000 $13,000 The company's interest rate (MARR) is 21%. Which extruder should the Styrofoam company choose? Use Annual Cash Flow Analysis and provide the right reason. Choosing SUPR-X is best because it has the lowest M&O cost in yr1 Choosing SUPR-X is best because it has the highest Annual Benefit Choosing SUPR-X will maximize the EUAB-EAUC; its value is $-127,486 higher than X and $15,650 higher than X-TRUD. Choosing SUPR-X will maximize the EUAB-EAUC; its value is $117,514 higher than X and $126,650 higher than X-TRUD.arrow_forwardPLEASE PROVIDE THE NEEDED ANSWER AND SOLUTION ASAP PLEASE THANKYOU A company purchased an air conditioner at SY Appliance Center for Php 45,000 and paid an installation fee of Php 6,000 with a delivery charge of Php 1,000. The air conditioner has an estimated life span of 5 years with a residual value of Php 15,000 a. What is the depreciable cost of the air conditioner? b. How much is the annual depreciation?arrow_forwardA machine’s first cost is $60,000 with salvage values over the next 5 years of are $50K, $40K, $32K, $25K, and $12K. The annual operating and maintenance costs are the same every year. Determine the machine total cost.arrow_forward
- On 1 May 2020, Ron Trading purchased a new machine. The following paymentsrelate to the machine.List price $21,500Purchase discount $2,000Transportation cost $300Repair of damage parts incurred in transporting the machine $1,000Fees paid to test the machine before use $500Fees paid to the installer to install the machine $800Machine operator’s salary for the first month of operation $3,000Maintenance costs for the first month of operation $300(i) Identify and compute the cost of the machine to be recognised. Explainyour reasoning.(ii) Journalise the transactions. Assume the above payments are paid in cash.arrow_forwardManjiarrow_forwardInformation for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $229,500. Project 2 requires an initial investment of $156,000. Annual Amounts Project 1 Project 2 Sales of new product $ 148,000 $ 128,000 Expenses Materials, labor, and overhead (except depreciation) 77,000 44,000 Depreciation—Machinery 32,000 30,000 Selling, general, and administrative expenses 20,000 32,000 Income $ 19,000 $ 22,000 (a) Compute each project’s annual net cash flow.(b) Compute payback period for each investment.arrow_forward
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