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Accounting
Sales. $225,000 Costs Materials, labor, and overhead (except depreciation on new equipment) 120,000 Depreciation on new equipment.. 30,000 Selling and administrative expenses. Total costs and expenses.. Pretax income... Income taxes (30%) 22,500 172,500 52,500 15,750 Net income. $ 36,750

Sales. $225,000 Costs Materials, labor, and overhead (except depreciation on new equipment) 120,000 Depreciation on new equipment.. 30,000 Selling and administrative expenses. Total costs and expenses.. Pretax income... Income taxes (30%) 22,500 172,500 52,500 15,750 Net income. $ 36,750

FINANCIAL ACCOUNTING
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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B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $360,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 144,000 units of the equipment’s product each year. The expected annual income related to this equipment follows. Compute the (1) payback period and (2) accounting rate of return for this equipment.

Sales. $225,000 Costs Materials, labor, and overhead (except depreciation on new equipment) 120,000 Depreciation on new equipment.. 30,000 Selling and administrative expenses. Total costs and expenses.. Pretax income... Income taxes (30%) 22,500 172,500 52,500 15,750 Net income. $ 36,750
Transcribed Image Text:Sales. $225,000 Costs Materials, labor, and overhead (except depreciation on new equipment) 120,000 Depreciation on new equipment.. 30,000 Selling and administrative expenses. Total costs and expenses.. Pretax income... Income taxes (30%) 22,500 172,500 52,500 15,750 Net income. $ 36,750
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