Answered: Machine First Cost, $ AOC, $ per year 1…

Machine First Cost, $ AOC, $ per year 1 -31,000 - 16,000 - 19,300 - 17,000 - 12,200 - 15,500 -29,000 3 -34,500 4 -49,000 -41,000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 8MC: What is the conversion cost to manufacture insulated travel cups if the costs are: direct materials,...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Ashley Foods, Inc. has determined that only one of five machines can be used in one phase of its dairy products operation. The first and annual costs are estimated; all machines are expected to have a 4-year useful life. If the MARR is 20% per year, determine which machine should be selected on the basis of rate of return.

Machine
First Cost, $
AOC, $ per year
1
-31,000
- 16,000
- 19,300
- 17,000
- 12,200
- 15,500
-29,000
3
-34,500
4
-49,000
-41,000

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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