ASSIGNED CH 8 PROBLEM statements 11 19 23

5 My work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Required information [The following information applies to the questions displayed below.] Beacon Company is considering automating its production facility. The initial investment in automation would be $9.11 million, and the equipment has a useful life of 7 years with a residual value of $1,200,000. The company will use straight- line depreciation. Beacon could expect a production increase of 44,000 units per year and a reduction of 20 percent in the labor cost per unit. Current (no automation) 71,000 units Proposed (automation) 115,000 units Per Per Production and sales volume Unit Total Unit Total Sales revenue $90 $ ? $90 $ ? Variable costs Direct materials $16 $ 16 Direct labor 15 ? Variable manufacturing overhead 9 9 Total variable manufacturing costs Contribution margin 40 ? $50 Fixed manufacturing costs Net operating income ? $ 1,130,000 $ 53 ? $…

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camdenccinstructure.com/courses/3788/asSignments/35976 Waterway Industries is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine $900000 $450000 Price 135000 Accumulated Depreciation -0- 10 years 0- Remaining useful life -0- 10 years Useful life Annual operating costs $360000 $270000 If the old machine is replaced, it can be sold for $36000. The company uses straight-line depreciation with a zero salvage value for all of its assets Which of the following amounts is relevant to the replacement decision? O $135000 O$90000 O$315000 $450000

Required information Use the following information for the Exercises below. (Algo) [The following information applies to the questions displayed below.] NewTech purchases computer equipment for $261,000 to use in operating activities for the next four years. It estimates the equipment's salvage value at $30,000. Exercise 8-7 (Algo) Straight-line depreciation LO P1 Prepare a table showing depreciation and book value for each of the four years assuming straight-line depreciation. Choose Numerator: Year Year 1 Year 2 Year 3 Year 4 Total Straight-Line Depreciation Choose Denominator: Annual Depreciation = = Annual Depreciation Expense Depreciation expense Year-End Book Value

Required information [The following information applies to the questions displayed below.] Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total $4,100,000 1,200,000 610,000 410,000 81,000 41,000 $6,442,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all the above as costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. Patont costs capitalized Required: 1. Determine the amount Satellite Systems should capitalize to the Patent account in the balance sheet.

Required information [The following information applies to the questions displayed below.] Satellite Systems modified its model Z2 satellite to incorporate a new communication device. The company made the following expenditures: Basic research to develop the technology Engineering design work Development of a prototype device Testing and modification of the prototype Legal fees for patent application Legal fees for successful defense of the new patent Total $ 3,500,000 1,100,000 550,000 350,000 75,000 35,000 $ 5,610,000 During your year-end review of the accounts related to intangibles, you discover that the company has capitalized all costs of the patent. Management contends that the device represents an improvement of the existing communication system of the satellite and, therefore, should be capitalized. 2. How much should Satellite Systems report as research and development expense in the income statement? Research and development expense

Can you tell me why this keeps saying that the answer is incomplete? I’ve already depreciated the asset down to its residual value.

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k Required information [The following information applies to the questions displayed below] University Car Wash purchased new soap dispensing equipment that cost $234,000 including installation. The company estimates that the equipment will have a residual value of $27,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year 1 Hours Used 2,800 2 1,900 3 2,000 4 2,000 5 6 1,800 1,500 t 3. Prepare a depreciation schedule for six years using the activity-based method. (Round your "Depreciation Rate" to 2 decimal places and use this amount in all subsequent calculations.) ] nces UNIVERSITY CAR WASH Depreciation Schedule-Activity-Based End of Year Amounts Depreciation Year Expense 1 2 3 4 5 6 Total $ Accumulated Depreciation Book Value

Scott Company purchased a new machine on January 1, Year 1, at a cost of $224,000. The machine is expected to have an eight-year life and a $20,000 salvage value. The machine is expected to produce 800,000 finished products during its eight-year life. Production during Year 1 was 70,600 units and during Year 2 was 117,000 units. TB Problem Qu. 6-135 (Algo) Part 1 Required: 1. Determine the amount of depreciation expense to be recorded on the machine for Year 1 and Year 2 under the straight-line method. Deprecation under straight-line method Year 1 Year 2

Scott Company purchased a new machine on January 1, Year 1, at a cost of $224,000. The machine is expected to have an eight-year life and a $20,000 salvage value. The machine is expected to produce 800,000 finished products during its eight-year life. Production during Year 1 was 70,600 units and during Year 2 was 117,000 units. TB Problem Qu. 6-135 (Algo) Part 1 Required: 1. Determine the amount of depreciation expense to be recorded on the machine for Year 1 and Year 2 under the straight-line method. Deprecation under straight-line method Year 1 2. Determine the amount of depreciation expense to be recorded on the machine for Year 1 and Year 2 under the units-of-production method. Depreciation under units-of-production method Year 2 Depreciation under double-declining-balance method Year 1 3. Determine the amount of depreciation expense to be recorded on the machine for Year 1 and Year 2 under the double-declining- balance method. Year 2 Year 1 Year 2

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Miller Optometry is considering the purchase of a new lens grinder to replace a machine that was purchased several years ago. Selected information on the two machines is given below:                                                                       old                 new  orignal cost when new                                80,000               85,000 accumulated depreciation to date              32,000             ------- current salvage value                                   26,000              ------ Annual operating cost                                  4,000                 3,000 Remaining useful life                                  4 years              4 years                              Ignore income taxes and the time value of money in this problem.                         Required:            Compute the total advantage or disadvantage of using the new machine instead of the old machine over the next four years.

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