A virtual mold apparatus for producing dental crowns permits an infinite number of shapes to be custom constructed based upon mold imprints taken by dentists. Two models are available. One costs $58,500 and is expected to last 9 years with no salvage value at that time. Costs of use are $30 per crown and 5,000 crowns per year are produced. The other mold apparatus costs $87,500, lasts 9 years, has no salvage value, and is less costly to use at $25 per crown. The dental supplier depreciates assets using MACRS(5). The income tax rate is 25% and MARR is an after-tax 10%. Comment on the differences in AWAT for each of these three analyses- Use MACRS-GDS(5) alone. b. Use MACRS-GDS(5) with 50% bonus depreciation. c. Use MACRS-GDS(5) with 100% bonus depreciation

A virtual mold apparatus for producing dental crowns permits an infinite number of shapes to be custom constructed based upon mold imprints taken by dentists. Two models are available. One costs $58,500 and is expected to last 9 years with no salvage value at that time. Costs of use are $30 per crown and 5,000 crowns per year are produced. The other mold apparatus costs $87,500, lasts 9 years, has no salvage value, and is less costly to use at $25 per crown. The dental supplier depreciates assets using MACRS(5). The income tax rate is 25% and MARR is an after-tax 10%. Comment on the differences in AWAT for each of these three analyses- Use MACRS-GDS(5) alone. b. Use MACRS-GDS(5) with 50% bonus depreciation. c. Use MACRS-GDS(5) with 100% bonus depreciation

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter3: Cost Behavior

Section: Chapter Questions

Problem 13E

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