Scribd
Upload
472 views

Cost of Machine Question

This document contains 4 questions regarding the computation of machine/equipment costs. Each question provides details of the list price, discounts, taxes, installation costs, insurance costs, freight costs, and any other relevant expenses to calculate the total cost of the machine/equipment. The instructions are to compute the total cost of the machine/equipment for each given scenario.

Uploaded by

Raffay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
472 views

Cost of Machine Question

This document contains 4 questions regarding the computation of machine/equipment costs. Each question provides details of the list price, discounts, taxes, installation costs, insurance costs, freight costs, and any other relevant expenses to calculate the total cost of the machine/equipment. The instructions are to compute the total cost of the machine/equipment for each given scenario.

Uploaded by

Raffay
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 1

Topic: Depreciation (Cost of machine)

Made by Sir Hyder Ali

MBA I,II

Q # 1) New machine was purchased by Hydro Tech at a list price of Rs. 40,000; 2% trade discount, the
credit terms were 2/10, n/30. Payment of the invoice was made within the discount period. The
payment includes 6% sales tax on the net price. Hydro Tech also paid transportation charges of Rs. 610
on the new machine as well as Rs. 760 for installing the machinery in the appropriate locations. During
the unloading and installation work, some of the machines fell from forklift and were damaged. Repair
of the damaged parts cost Rs. 2,710. After the machine had been in use for 3 months, it was thoroughly
cleaned and lubricated at a cost of Rs. 260.

INSTRUCTION: Compute the Cost of Machine

Q # 2) Brenner Graphics, a newly organized St. Louis corporation, purchased typesetting equipment
having a list price of Rs. 204,000 from a manufacturing in the New England area. Credit terms for the
transaction were 2/10, n/30. Brenner Graphics paid the invoice within the discount period, as well as an
additional 7% sales tax on the net price. Other payments relating to the acquisition of the equipment
were a freight bill of Rs. 2,596 and a labor cost for installing the equipment of Rs. 4,210. During the
installation process, an accident caused damage to the equipment, which was repaired at cost of Rs.
5,000. As soon as the equipment was in place, the company obtained insurance on it for a premium of
Rs. 1,800.

INSTRUCTION: Compute the Cost of Equipment

Q # 3 On April 02, 2009 the Global Company acquired equipment. It has estimated useful life of 3
years with salvage value Rs. 5,000 the following expenditure were incurred on it.
1. Billed Price Rs. 275,000.
2. Freight Charges Rs. 2,000 and Transit Insurance Rs. 3,000.
3. Installation Expenses Rs. 25,000
4. Three years Fire Insurance Rs. 15,000.
INSTRUCTION: Compute the Cost of Equipment

Q # 4 Fazil Company purchased a machine on April 01, 2001 at a list price of Rs. 60,000 with a trade
discount at 5%. The credit terms were 2/10, n/30.
The payment was made within discount period. The company incurred the following additional
expenditure.
i. 4% Sales Tax on the cash price of Machine.
ii. Custom duty Rs. 11,000
iii. Installation and testing cost Rs. 13,000
iv. The Machine was insured against fire and premium paid Rs. 3,500
v. Insurance in transit Rs. 5,000
vi. Fright in Rs. 2,500

INSTRUCTION: Compute the cost of Machine

You might also like