Blue Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2020. Purchase Cash paid for equipment, including sales tax of $6,400 Freight and insurance cost while in transit $134,400 2,560 Cost of moving equipment into place at factory 3,968 Wage cost for technicians to test equipment 5,120 Insurance premium paid during first year of operation on this equipment 1,920 Special plumbing fixtures required for new equipment 10,240 Repair cost incurred in first year of operations related to this equipment 1,664 Construction Material and purchased parts (gross cost $256,000; failed to take 2% cash discount) Imputed interest on funds used during construction (stock financing) $256,000 17,920 Labor costs 243,200 Allocated overhead costs (fixed-$25,600; variable-$38,400) Profit on self-construction Cost of installing equipment 64,000 38,400 5,632 Compute the total cost to be capitalized for each of these two pieces of equipment. Purchase equipment $ Construction equipment $
Blue Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2020. Purchase Cash paid for equipment, including sales tax of $6,400 Freight and insurance cost while in transit $134,400 2,560 Cost of moving equipment into place at factory 3,968 Wage cost for technicians to test equipment 5,120 Insurance premium paid during first year of operation on this equipment 1,920 Special plumbing fixtures required for new equipment 10,240 Repair cost incurred in first year of operations related to this equipment 1,664 Construction Material and purchased parts (gross cost $256,000; failed to take 2% cash discount) Imputed interest on funds used during construction (stock financing) $256,000 17,920 Labor costs 243,200 Allocated overhead costs (fixed-$25,600; variable-$38,400) Profit on self-construction Cost of installing equipment 64,000 38,400 5,632 Compute the total cost to be capitalized for each of these two pieces of equipment. Purchase equipment $ Construction equipment $
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 63P
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Transcribed Image Text:Blue Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of
equipment were recorded in random order during the calendar year 2020.
Purchase
Cash paid for equipment, including sales tax of $6,400
Freight and insurance cost while in transit
$134,400
2,560
Cost of moving equipment into place at factory
3,968
Wage cost for technicians to test equipment
5,120
Insurance premium paid during first year of operation on this equipment
1,920
Special plumbing fixtures required for new equipment
10,240
Repair cost incurred in first year of operations related to this equipment
1,664
Construction
Material and purchased parts (gross cost $256,000; failed to take 2% cash discount)
Imputed interest on funds used during construction (stock financing)
$256,000
17,920
Labor costs
243,200
Allocated overhead costs (fixed-$25,600; variable-$38,400)
Profit on self-construction
Cost of installing equipment
64,000
38,400
5,632
Compute the total cost to be capitalized for each of these two pieces of equipment.
Purchase equipment
$
Construction equipment
$
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