Calculate the real cost of the labeler

Assignment Help Cost Accounting
Reference no: EM132620417

SPI-K is considering the purchase of a new labeling machine that will keep detailed records of every item processed. The labeler is likely to have little effect on operating revenues and expenses. Its acquisition is primarily for increasing management information about processing. The labeler costs $144,600 and would be included in Class 8 for tax purposes. SPI-K internal accountant has stated that due to the fast write-off of Class 8 assets (20% CCA rate), its real cost is less than $144,600. Due to technological obsolescence, it would have zero salvage value.

Required:

Question a. Since the labeler cannot produce a profit or even show short run savings, should it even be evaluated as a capital budgeting expenditure? Explain.

Question b. Explain whether the real cost is less than $144,600.

Question c. If the company has a 40 percent tax rate and a 18% discount rate, calculate the real cost of the labeler. Assume there would be other assets in the class.

Reference no: EM132620417

Questions Cloud

What is our unemployment rate for this month : What policy(fiscal or monetary) is more effective at stabilizing an economy that is in a recession? Make sure to explain your reasoning.
What are the three key purposes in adding : What are the three (3) key purposes in adding and calculating in process costing. Explain what is the meant for process costing. Discuss in detail.
Discuss topic - training and development review : Training and Development Review: Post a rewritten version of your topic and objectives for your training and development plan (originally submitted for).
Illustrate applying supply and demand analysis : Illustrate applying Supply and Demand analysis the impact of price ceilings on beef in Venezuela. Also, make sure to explain your graph.
Calculate the real cost of the labeler : If the company has a 40 percent tax rate and a 18% discount rate, calculate the real cost of the labeler. Assume there would be other assets in the class
Support of agricultural subsidies and rent controls : What are the arguments in support of agricultural subsidies and rent controls? Please provide contemporary example of each.
Developing a plan for evaluation of training effectiveness : To Plan, Design, Deliver, and Evaluate an Original Training Program: Assess the Draft Training Proposal and peer feedback you received in Week Two.
Issue of unemployment and inflation : Evaluate whether the Phillips curve can still validly resolve today's issue of unemployment and inflation
How changes in the price level are measured in an economy : Inflation is a economic problem faced by many economies, but governments differ in how they attempt to bring down the rate of inflation.

Reviews

Write a Review

Cost Accounting Questions & Answers

  Determine the price for the part using a desired life-cycle

Determine the price for the part using a desired life-cycle cost margin percentage to sales of 26%. Determine the price for the part using a markup

  How would balance sheet be different

How would balance sheet be different if the business had used accelerated depreciation - companys most recent balance sheet

  Find cost of good sold and closing stock

Find Cost of good sold and Closing stock using Perpetual system using FIFO and Weighted Average methods and Economic Order Quantity and Total cost

  Can a person with a substance abuse addiction

Can a person with a substance abuse addiction ever be considered disabled under the ADA? Under what circumstances?

  Cost-based pricing

Otero Fibers, Inc., specializes in the manufacture of synthetic fibers that the company uses in many products such as blankets, coats, and uniforms for police and firefighters. Otero has been in business since 1985 and has been profitable every year ..

  What do you learn about the company hp inc

What do you learn about the company? What areas are changing and may be opportunities for cost control and improved profits?

  Compute the unit product cost for chairs

Compute the unit product cost for chairs rounded to the nearest cent. Compute the unit product cost for chairs rounded to the nearest cent.

  Set product price for the current year

Your job is to provide management with multiple (three or more) cost calculations that could be used to set product price for the current year (2005) and to explain/justify the amounts you calculate. You are to calculate cost, not to suggest the sell..

  Effective interest method and plans

The discount of $23,900 gives an effective yield of 11 percent. Patton Company uses the effective-interest method and plans to hold these bonds to maturity.

  What is the selling price per stick

The sales volume of $1572310.65 is necessary to produce an operating income of $223669.42. If fixed costs are $386445.03, what is the selling price per stick?

  Distinguish between job costing and batch costing

Cite two (2) examples of work that may be done using specific order costing and two (2) examples of work that may be done using costing for continuous work.

  What is new economic order quantity for the item

What is your new economic order quantity for this item? Remember you have to order in increments of 10. Also compute TRC to prove your answer.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd