Accounting

 1.
VC • Wages paid to temporary workers
FC • Property taxes on a factory building.
FC • Property taxes on an administrative building.
VC • Sales commission.
VC • Electricity for machinery and equipment in the plant.
FC • Heating and air-conditioning for the plant.
FC • Salaries paid to design engineers.
FC • Regular maintenance on machinery and equipment.
VC • Basic raw materials used in production.
FC • Factory fire insurance.
Answer:
TC = VC + FC
Rooney will reduce total costs by: (-5.6)*8,000 + 20,000 = -24,800$;
Blair will reduce total costs by: (-4)*8,000 + 5,000 = -27,000;
That’s why we should purchase Blair, as it is more cost reducing.
Answer:
TC = FC + VC
Units 0 200 400 600
Costs 600 1,200 1,600 1,800
VC 0 600 1,000 1,200
FC 600 600 600 600
a. FC = $600
b. VC = $1,200
c. ATC = 1,600/400 = $4
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Sample: Economics - Accounting for Fixed Assets
1
d. MC = (1,200 – 600)/(200 – 0) = $3
e. MC = (1,800 – 1,600)/(600 – 400) = $1
f. FC = const, AFC = FC/Q = 600/1,000 = $0.6
g. If we suppose, that VC = 1350, AVC = VC/Q = 1,350/1,000 = $1.35
Answer:
a. We maximize profit, if MR = MC, MR = ∆TR/∆Q = P, ∆TC/∆Q, profit is TP = TR
– TC. As we calculated (see the excel sheet), MR = MC between 100 and 101
unit, when n = 100, TP = $30,000 is max.
b. TP = $30,000
c. FC = 50,000 as the constant number of the TC equation.
Answer:
a. Tangible, personal, non-depreciable.
b. Tangible, personal, depreciable.
c. Tangible, real, non-depreciable.
d. Tangible, real, non-depreciable.
e. Tangible, real, non-depreciable.
f. Tangible, personal, depreciable.
g. Tangible, personal, depreciable.
h. Tangible, real, non-depreciable.
i. Tangible, real, non-depreciable.
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Answer:
a.
Book value at
beginning of year
Depreciation
expense
Accumulated
depreciation
Book value at
end of year
$1,600,000
(original cost)
$300,000 $300,000 $1,300,000
$1,300,000 $300,000 $600,000 $1,000,000
$1,000,000 $300,000 $900,000 $700,000
$700,000 $300,000 $1,200,000 $400,000
$400,000 $300,000 $1,500,000 $100,000 (salvage
value)
b. Annual Depreciation = Depreciation Rate * Book Value at Beginning of Year
Book value at
beginning of
year
Depreciation
rate
Depreciation
expense
Accumulated
depreciation
Book value
at
end of year
1,600,000 42,56503% 681,040 681,040 918,960
918,960 42,56503% 391,155 1,072,196 527,804
527,804 42,56503% 224,660 1,296,856 303,144
303,144 42,56503% 129,033 1,425,889 174,111
174,111 42,56503% 74,110.3 1,500,000 100,000
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c.
Book value at
beginning of
year
Depreciation
rate
Depreciation
expense
Accumulated
depreciation
Book value
at
end of year
$1,600,000
(original cost)
40% $640,000 $640,000 $960,000
$960,000 40% $384,000 $1,024,000 $576,000
$576,000 40% $230,400 $1,254,400 $345,600
$345,600 40% $138,240 $1,392,640 $207,360
$207,360 $207,360 - $100 $107,360 $1,500,000 $100,000
(salvage
value)
d.
Book
value at
beginning
of year
Depreciati
on
expense
(straightline)
Depreciati
on
rate
Depreciati
on
expense
Depreciati
on expense
(final)
Accumulat
ed
depreciatio
n
Book
value at
end of
year
$1,600,00
0
(original
cost)
$300,000 40% $640,000 $640,000 $640,000 $960,00
0
$960,000 $215,000 40% $384,000 $384,000 $1,024,000 $576,00
0
$576,000 $158,667 40% $230,400 300 $1,254,400 $345,60
0
$345,600 $81,867 40% $138,240 300 $1,392,640 $207,36
0
$207,360 $107,36 40% $82,944 300 $1,500,000 $100,00
0
(salvag
e value)
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Answer:
a. Cost basis is $320,000
b. Salvage value is $60,000
c. Total units quantity = 24,000*60/6 = 240,000, N = 4 years (24,000 +
24,000*2 + 24,000*3 + 24,000*4 = 240,000)
d.
Depreciation = (380,000 – 60,000)/240,000 = $1.33 per unit.
Book value
at
beginning
of year
Units Depreciation
cost per unit
Depreciation
expense
Accumulated
depreciation
Book
value at
end of
year
$380,000 24,000 $1.33 $31,920 $31,920 $348,080
$348,080 48,000 $1.33 $63,840 $95,760 $284,240
$284,240 72,000 $1.33 $95,760 $191,520 $188,480
$188,480 96,000 $1.33 $128,480 $320,000 $60,000
Answer:
Book value
at
beginning of
year
% Depreciation
expense
Accumulated
depreciation
Book
value at
end of
year
6,000 14.29% $857.4 $857.4 $5,142.6
$5,142.6 24.49% $1,259.42 $2,116.82 $2,623.76
$2,623.76 17.49% $458.9 $2,575.72 $2,164.86
At the end of the third year we have 17.49% level of depreciation, so the book
value will be $2,164.86.
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5