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At its Lyle Avenue plant, Milan Pasta produces two types of pasta: spaghetti and fettuccine. The two pastas are produced on the same machines, with different settings and slightly different raw materials. The fettuccine, being a wider noodle and more susceptible to curling edges, requires more inspection time. The total daily cost of inspection is $500. Here are daily production data for the two products: Required: a. Calculate the inspection cost per pound of pasta using traditional absorption costing with number of machine hours as the allocation base. b. Calculate the inspection cost per pound of pasta using activity-based costing. Assume inspection time is the cost driver. c. Analyze why inspection costs differ between the methods used in (a) and ( b).
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Determine the present value of the lease payments at June 30, 2009 (to the nearest $000) that Blue uses to record the leased asset and lease liability.
Marchand Corp is considering the purchase of a new piece of equipment, which would have an initial cost of $500,000, a 7 year life, and $150,000 salvage value. The increase in cash flow each year of the equipment's life would be as follows:
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