A machine costing P 95,000 is expected to produce 10,000 units of a certain products during its entire life before being replaced. At the end of its life, it will have a scrap value of P 5,000. The cost of housing the machine is P 2,500 a year. The power consumption per unit is P 0.90 and the maintenance of the machine per unit will be P 0.70. Labor costs P 3.50 per unit. If depreciation is by declining balance method, determine the cost per unit in its 3rd year of operation if the annual production is 2500 units.

A machine costing P 95,000 is expected to produce 10,000 units of a certain products during its entire life before being replaced. At the end of its life, it will have a scrap value of P 5,000. The cost of housing the machine is P 2,500 a year. The power consumption per unit is P 0.90 and the maintenance of the machine per unit will be P 0.70. Labor costs P 3.50 per unit. If depreciation is by declining balance method, determine the cost per unit in its 3rd year of operation if the annual production is 2500 units.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

A machine costing P 95,000 is expected to produce 10,000 units of a certain
products during its entire life before being replaced. At the end of its life, it
will have a scrap value of P 5,000. The cost of housing the machine is P 2,500
a year. The power consumption per unit is P 0.90 and the maintenance of the
machine per unit will be P 0.70. Labor costs P 3.50 per unit. If depreciation is
by declining balance method, determine the cost per unit in its 3rd year of
operation if the annual production is 2500 units.

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