Devry ACCT 301 Week 5 Homework
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Problem 1
Required: Identify each of the following as either a direct or indirect cost.
|
| Direct or Indirect? | |
| Material used in production | |
| Salary of manufacturing supervisor | |
| Wages of manufacturing worker | |
| Telephone costs | |
| Rent |
| Required: GH Company is trying to decide whether to replace a current piece of machinery with a new machine. Using the below data, determine the relevant costs of the old machine and the new machine. Should GH Company purchase the new machine? |
| Old Machine | New machine | |
| Original cost | 100,000 | |
| Accumulated depreciation | (50,000) | |
| Book value | 50,000 | |
| Market value (now) | 25,000 | 30,000 |
| Salvage value (in 5 years) | 5,000 | 8,000 |
| Annual depreciation expense | 11,000 | |
| Operating expenses | ||
| Per year | 9,000 | 4,500 |
| Times number of years | 4 | 4 |
| Total operating expenses | 36,000 | 18,000 |
11 years ago
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