Demmert Production spent the following money in the current fiscal year: $5,400 on equipment yearly maintenance; $22,000 on refurbishing offices; $35,000 on improving efficiency in the shipping and receiving area; and $25,000 on installing a security system in the manufacturing plant. What is Demmert supposed to do with all of these bills?

Demmert Production spent the following money in the current fiscal year: $5,400 on equipment yearly maintenance; $22,000 on refurbishing offices; $35,000 on improving efficiency in the shipping and receiving area; and $25,000 on installing a security system in the manufacturing plant. What is Demmert supposed to do with all of these bills?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4PB: During the current year, Arkells Inc. made the following expenditures relating to plant machinery. ...

See similar textbooks

Similar questions

During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated five machines for $100,000 to improve efficiency in production of their remaining useful life of five years Low-cost repairs throughout the year totaled $70,000 Replaced a broken gear on a machine for $10,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of 25,750 and is capable of processing as many as 6,500 purchase orders per year. Each clerk uses a PC and laser printer in processing orders. Time available on each PC system is sufficient to process 6,500 orders per year. The cost of each PC system is 1,100 per year. In addition to the salaries, Elliott spends 27,560 for forms, postage, and other supplies (assuming 26,000 purchase orders are processed). During the year, 25,350 orders were processed. Required: 1. Classify the resources associated with purchasing as (1) flexible or (2) committed. 2. Compute the total activity availability, and break this into activity usage and unused activity. 3. Calculate the total cost of resources supplied (activity cost), and break this into the cost of activity used and the cost of unused activity. 4. (a) Suppose that a large special order will cause an additional 500 purchase orders. What purchasing costs are relevant? By how much will purchasing costs increase if the order is accepted? (b) Suppose that the special order causes 700 additional purchase orders. How will your answer to (a) change?
During the current year, Arkells Inc. made the following expenditures relating to plant machinery. Renovated seven machines for $250,000 to improve efficiency in production of their remaining useful life of eight years Low-cost repairs throughout the year totaled $79,000 Replaced a broken gear on a machine for $6,000 A. What amount should be expensed during the period? B. What amount should be capitalized during the period?
In 2016, the city of Abu Dhabi collected $24 million in fines from motorists because of traffic violations caught by red-light cameras. The cost of operating the system was $14.5 million. The net profit, that is, profit after operating costs, is split equally (that is, 50% each) between the city and the operator of the camera system. What will be the rate of return over a 3-year period to the contractor that paid for, installed, and operates the system, if its initial cost was $10 million and the profit for each of the 3 years is the same as it was in 2016? Should the company invest in this project at MARR of 15% per year?
During the first 10 years of the life of a certain machine the following were spent for its maintenance: During the first 5 years, P 3,000 was spent each year; during the second 5 years, P 5,000 each year was spent. In addition, P 8,000 was spent for overhauling at the end of the fourth year and P 10,000 also for overhauling at the end of the ninth year. If money is worth 9% compounded annually, what is the equivalent uniform annual cost for the 10-year period?
A computerized machining center has been proposed for a small tool manufacturing company. If the new system, which costs $125,000, is installed, it will generate annual revenues of $100,000 and will require $20,000 in annual labor, $12,000 in annual material expenses, and another $8,000 in annual overhead (power and utility) expenses. A loan of $100,000 is borrowed from the bank for installation of the machining center which is repaid by equal annual repayments in 5 years at an interest rate of 8% compounded quarterly. Note that there is a working-capital requirement of $23,331 in year 0 and full recovery of the working capital at the end of year 5 for the machining center. The machining center would be classified as a seven-year MACRS property. If the asset is held for eight years, we can depreciate a seven-year property in respective percentages of 14.29%, 24.49%, 17.49%, 12.49%, 8.93%, 8.92%, 8.93%, and 4.46%. The company expects to phase out the facility at the end of five years,…
Steamboat Springs Furniture, Inc., is considering purchasing a new finishing lathe that costs $61,515.00. The lathe will generate revenues of $99,298.00 per year for five years. The cost of materials and labor needed to generate these revenues will total $50,526.00 per year, and other cash expenses will be $10,290.00 per year. The machine is expected to sell for $9,266.00 at the end of its five-year life and will be depreciated on a straight-line basis over five years to zero. Steamboat Springs' marginal tax rate is 36.00 percent, and its cost of capital is 14.00 percent. What is the NPV of the project?
During the first 10 years of the life of a certain machine the following were spent for its maintenance: During the first 5 years, P3000 was spent each year, during the second 5 years, P5000 each year was spent. In addition, P8000 was spent for overhauling at the end of the fourth year, and P10,000 also for overhauling at the end of the ninth year. If money is worth 9% compounded annually, what was she equivalent uniform annual cost for the tenyear period? pls show handwritten solution with cashflow diagram
The milk processing plant of Nestle Company plans to replace 5 trucks of distribution of its current fleet of trucks that it maintains for distributions nationwide. The initial cost is $ 4,600 per truck and the expected useful life and salvage value will be 5 years and $ 300, respectively. The combined costs of insurance, maintenance, fuel and lubrication are expected to total is $ 650 for the first year and increases by $ 50 per year; while the delivery service will report additional revenue of $ 1,200 annually to the company. If the required rate of return is 10% per annum, use the ANNUAL VALUE method to determine if the purchase should go through. Extend your answer in as for the result. CASH FLOW CHART (Insert flow chart)
Sancheti company, a maker of skating gear, is evaluating two alternative presses. Press A costs $85,000, has a 4-year life, and is expected to generate annual cash inflows of $30,500 in each of the 4 years. Press B costs $123,500, has an 8-year life, and is expected to generate annual cash inflows of $25,300 in each of 8 years. The cost of replacement for Press A is $86,000, and the replacement press will generate cash inflows of $32,200 for another 4 years. Sancheti company uses a 13% cost of capital. Which press should be chosen and why?
The maintenance of a machine in a manufacturing plant currently costs a company $12,000 every year (paid at the end of each year) with the cost increasing by $1,000 each subsequent year. Because of this, the plant manager is considering replacing this machine with a newer one which would cost $30,000 to purchase today, and then $7,300/year increasing by $500 in each year to maintain (also paid at the end of the year). If the company's MARR is at 7% per year compounded annually, what would be the discounted payback period (in years) for this proposed investment?
The Highway Department expects the cost of maintenance for a piece of heavy construction equipment to be $5000 in year 1, to be $5500 in year 2, and to increase annually by $500 through year 10. At an interest rate of 10% per year, determine the present worth of 10 years of maintenance costs.