Loren Company uses many kinds of machines in operations. The entity acquires some machines from others and constructs some machines itself. The following information pertains to a machine constructed by Loren: Cost of material to construct 700,000 Labor cost 430,000 Allocated overhead costs – electricity, factory space, etc. Allocated interest cost of financing machine Cost of installation 220,000 100,000 120,000 Insurance for one year Profit saved by self-construction Safety inspection cost prior to use 20,000 150,000 40,000 What total amount should be capitalized as cost of the machine?

Loren Company uses many kinds of machines in operations. The entity acquires some machines from others and constructs some machines itself. The following information pertains to a machine constructed by Loren: Cost of material to construct 700,000 Labor cost 430,000 Allocated overhead costs – electricity, factory space, etc. Allocated interest cost of financing machine Cost of installation 220,000 100,000 120,000 Insurance for one year Profit saved by self-construction Safety inspection cost prior to use 20,000 150,000 40,000 What total amount should be capitalized as cost of the machine?

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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Crane Corp. purchased land as a factory site for $280000. They paid $12200 to tear down two buildings on the land, and the salvage from these old buildings was sold for $1310. Legal fees of $830 were paid for title investigation and making the purchase. Architect's fees were $10370. Title insurance cost $610, and liability insurance during construction cost $650. Excavation costs were $2970. A contractor was paid $677000 to construct the new building. An assessment made by the city for pavement was $1740. Interest costs during construction were $43300. The cost of the land should be recorded at $292330. O $294770. O $296510. O $294070.
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Munoz Company makes and sells lawn mowers for which it currently makes the engines. It has an opportunity to purchase the engines from a reliable manufacturer. The annual costs of making the engines are shown here. Cost of materials (13,100 Units × $19) $ 248,900 Labor (13,100 Units × $12) 157,200 Depreciation on manufacturing equipment* 25,000 Salary of supervisor of engine production 69,000 Rental cost of equipment used to make engines 27,000 Allocated portion of corporate-level facility-sustaining costs 82,000 Total cost to make 13,100 engines $ 609,100 *The equipment has a book value of $108,000 but its market value is zero.Required Determine the maximum price per unit that Munoz would be willing to pay for the engines. Determine the maximum price per unit that Munoz would be willing to pay for the engines, if production increased to 18,650 units. (For all requirements, Round your answers to 2 decimal places.)
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BolaBola uses different kinds of machines in its manufacturing process. The following information relates to the acquisition of machines that it has recorded in 2020.· Cash paid for equipment- P250,000· Cost of transporting machine - insurance and transport- P9,000· Labor cost of installation by expert fitter- P15,000· Labor cost of testing equipment- P12,000· Insurance cost for 2020- P4,500· Cost of training for personnel who will use the machine- P7,500· Cost of safety rails and platforms surrounding machine- P18,000· Cost of water devices to keep machine cool- P24,000· Cost of adjustments to machine during 2020 to make it operate more efficiently- P22,500 What is the cost of the machine?
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