Sales. $225,000 Costs Materials, labor, and overhead (except depreciation on new equipment) 120,000 Depreciation on new equipment.. 30,000 Selling and administrative expenses. Total costs and expenses.. Pretax income... Income taxes (30%) 22,500 172,500 52,500 15,750 Net income. $ 36,750

Sales. $225,000 Costs Materials, labor, and overhead (except depreciation on new equipment) 120,000 Depreciation on new equipment.. 30,000 Selling and administrative expenses. Total costs and expenses.. Pretax income... Income taxes (30%) 22,500 172,500 52,500 15,750 Net income. $ 36,750

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...

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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

B2B Co. is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $360,000 with a 12-year life and no salvage value. It will be depreciated on a straight-line basis. The company expects to sell 144,000 units of the equipment’s product each year. The expected annual income related to this equipment follows. Compute the (1) payback period and (2) accounting rate of return for this equipment.

Sales.
$225,000
Costs
Materials, labor, and overhead (except depreciation on new equipment)
120,000
Depreciation on new equipment..
30,000
Selling and administrative expenses.
Total costs and expenses..
Pretax income...
Income taxes (30%)
22,500
172,500
52,500
15,750
Net income.
$ 36,750

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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