For Neel
holdmeback
neel_5.xlsxProblem 1
| Problem 1 | |
| Required: Identify each of the following as either a direct or indirect cost. | |
| (20 points) | |
| Direct or Indirect? | |
| Material used in production | |
| Salary of manufacturing supervisor | |
| Wages of manufacturing worker | |
| Telephone costs | |
| Rent |
Problem 2
| Problem 2 | ||
| 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? | ||
| (30 points) | ||
| 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 |
