Reference no: EM132208182
Question - Air Service Avionic is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $484,000 cost with an expected five-year life and a $15,700 salvage value. All sales are for cash, and all costs are out of pocket except for depreciation on the new machine. Additional information includes the following:
Expected annual sales of new product equal $1,870,000
Expected annual costs of new product and direct materials are $455,000
Direct labor cost is $673,000
Overhead excluding Straight Line depreciation on new machine is $337,000
Selling and administrative expenses are $157,000
Income taxes are 34 percent
Compute Straight Line depreciation for each year of this new machine's life.