Two machines are being taken into consideration for the manufacturing of a selected component for which there's a protracted-term demand. Machine A value P50,000.00 and is anticipated to final three years and feature a P10,000 salvage value. Machine B expenses P75,000.00 and is anticipated to final 6 years and feature 0 salvage value. Machine A can produce a component in 18 seconds; Machine B calls for the simplest 12 seconds in step with the component. The out-of-pocket hourly value of the operation is P38.00 for A and P30.00 for B. Monthly Maintenance values is P200.00 for A and P220.00 for B. If the hobby on invested capital is 25%, decide the range of components in step with yr. at which the machines are similarly economical. If the anticipated range of components in step with yr. is extra than this break-even quantity, which gadget might be favored?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Two machines are being taken into consideration for the manufacturing of a selected component for which there's a protracted-term demand. Machine A value P50,000.00 and is anticipated to final three years and feature a P10,000 salvage value. Machine B expenses P75,000.00 and is anticipated to final 6 years and feature 0 salvage value. Machine A can produce a component in 18 seconds; Machine B calls for the simplest 12 seconds in step with the component. The out-of-pocket hourly value of the operation is P38.00 for A and P30.00 for B. Monthly Maintenance values is P200.00 for A and P220.00 for B. If the hobby on invested capital is 25%, decide the range of components in step with yr. at which the machines are similarly economical. If the anticipated range of components in step with yr. is extra than this break-even quantity, which gadget might be favored?

Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Relevant cost analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education