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XYZ Corporation purchased a piece of equipment for $100,000 on January 1, 2023. The equipment has an estimated useful life of 5 years and a salvage value of $10,000. XYZ uses the straight-line depreciation method for all its fixed assets. At the end of the third year, XYZ decides to sell this equipment for $55,000 on December 31, 2025. What is the book value of the equipment at the time of sale? What is the gain or loss on the sale of this equipment? How would this transaction be recorded in XYZ's books? ABC Manufacturing produces widgets and gadgets using the same equipment and labor force. The company's total manufacturing overhead for the year is $500,000. ABC uses machine hours as the allocation base for overhead, with widgets requiring 2 machine hours per unit and gadgets requiring 3 machine hours per unit. Last year, ABC produced 10,000 widgets and 8,000 gadgets. Calculate the overhead rate per machine hour and determine the amount of overhead that should be allocated to each product line. How much overhead cost would be assigned to a single widget and a single gadget?

XYZ Corporation purchased a piece of equipment for $100,000 on January 1, 2023. The equipment has an estimated useful life of 5 years and a salvage value of $10,000. XYZ uses the straight-line depreciation method for all its fixed assets. At the end of the third year, XYZ decides to sell this equipment for $55,000 on December 31, 2025. What is the book value of the equipment at the time of sale? What is the gain or loss on the sale of this equipment? How would this transaction be recorded in XYZ's books? ABC Manufacturing produces widgets and gadgets using the same equipment and labor force. The company's total manufacturing overhead for the year is $500,000. ABC uses machine hours as the allocation base for overhead, with widgets requiring 2 machine hours per unit and gadgets requiring 3 machine hours per unit. Last year, ABC produced 10,000 widgets and 8,000 gadgets. Calculate the overhead rate per machine hour and determine the amount of overhead that should be allocated to each product line. How much overhead cost would be assigned to a single widget and a single gadget?

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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XYZ Corporation purchased a piece of equipment for $100,000 on January 1, 2023. The equipment has an estimated useful life of 5 years and a salvage value of $10,000. XYZ uses the straight-line depreciation method for all its fixed assets. At the end of the third year, XYZ decides to sell this equipment for $55,000 on December 31, 2025. What is the book value of the equipment at the time of sale? What is the gain or loss on the sale of this equipment? How would this transaction be recorded in XYZ's books? ABC Manufacturing produces widgets and gadgets using the same equipment and labor force. The company's total manufacturing overhead for the year is $500,000. ABC uses machine hours as the allocation base for overhead, with widgets requiring 2 machine hours per unit and gadgets requiring 3 machine hours per unit. Last year, ABC produced 10,000 widgets and 8,000 gadgets. Calculate the overhead rate per machine hour and determine the amount of overhead that should be allocated to each product line. How much overhead cost would be assigned to a single widget and a single gadget?
Transcribed Image Text:XYZ Corporation purchased a piece of equipment for $100,000 on January 1, 2023. The equipment has an estimated useful life of 5 years and a salvage value of $10,000. XYZ uses the straight-line depreciation method for all its fixed assets. At the end of the third year, XYZ decides to sell this equipment for $55,000 on December 31, 2025. What is the book value of the equipment at the time of sale? What is the gain or loss on the sale of this equipment? How would this transaction be recorded in XYZ's books? ABC Manufacturing produces widgets and gadgets using the same equipment and labor force. The company's total manufacturing overhead for the year is $500,000. ABC uses machine hours as the allocation base for overhead, with widgets requiring 2 machine hours per unit and gadgets requiring 3 machine hours per unit. Last year, ABC produced 10,000 widgets and 8,000 gadgets. Calculate the overhead rate per machine hour and determine the amount of overhead that should be allocated to each product line. How much overhead cost would be assigned to a single widget and a single gadget?
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