Your company has just signed a three-year nonrenewable contract with the city of New Orleans for earthmoving work. You are investigating the purchase of heavy construction equipment for this job. The equipment costs $200,000 and qualifies for five-year MACRS depreciation. At the end of the three-year contract, you expect to be able to sell the equipment for $70,000. If the projected operating expense for the equipment is $65,000 per year, what is the after-tax equivalent uniform annual cost (EUAC) of owning and operating this equipment? The effective income tax rate is 40%, and the after-tax MARR is 12% per year.

Q: A highway construction firm purchased a particular earthmoving machine 3 years ago for $125,000. The…

A: The annual cash flows of existing method are as follows: Resultant table:

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Q: A construction company operates a bulldozer that initially costs $28,000. The first year maintenance…

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Q: Your company has just signed a three-year nonrenewable contract with the city of New Orleans for…

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Q: Able Plastics, an injection-molding firm, has negotiated a contract with a national chain of…

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Q: You have been asked by the president of your company to evaluate the proposed acquisition of a new…

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Q: WHC will need to purchase additional necessary equipment, which will cost $77 million. To get the…

A:

Q: Brown Company is considering the purchase of a new machine to replace an existing one. The old…

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Q: A construction company has purchased a motor for P20,000 and a generator for P8,000 to produce its…

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A: Computation:

Q: ur company has just signed a three-year nonrenewable contract with the city of New Orleans for…

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A:

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Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.