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You consider the purchase of a copier for your business. The initial

You consider the purchase of a copier for your business. The initial

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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Required 2-30 Cost of goods manufactured. You consider the purchase of a copier for your business. The initial investment is $15,000. After one year the copier will be replaced by a new one. In order to calculate the cost of one copy, you need to know the depreciation of the copier. The manufacturer of the copier gives you the following information: Number of copies during the year Salvage value after one year 10,000 20,000 30,000 $11,500 $11,000 $10,500 1. What are the variable costs? 2. Calculate the fixed costs per year and the variable costs per copy. You conclude that the depreciation per copy depends on the number of copies made: Number of copies during the year 10,000 20,000 30,000 Cost per copy $3,500/10,000 - $0.35 $4,000/20,000 = $0.20 $4,500/30,000 = $0.15 3. Is a changing cost per copy acceptable and or desirable? If not, what would be a solution? Show your calculations.
Transcribed Image Text:Required 2-30 Cost of goods manufactured. You consider the purchase of a copier for your business. The initial investment is $15,000. After one year the copier will be replaced by a new one. In order to calculate the cost of one copy, you need to know the depreciation of the copier. The manufacturer of the copier gives you the following information: Number of copies during the year Salvage value after one year 10,000 20,000 30,000 $11,500 $11,000 $10,500 1. What are the variable costs? 2. Calculate the fixed costs per year and the variable costs per copy. You conclude that the depreciation per copy depends on the number of copies made: Number of copies during the year 10,000 20,000 30,000 Cost per copy $3,500/10,000 - $0.35 $4,000/20,000 = $0.20 $4,500/30,000 = $0.15 3. Is a changing cost per copy acceptable and or desirable? If not, what would be a solution? Show your calculations.
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