AirPac Packaging Systems Are Used to Create Airtight Packages for Meat

question 59

Essay

AirPac packaging systems are used to create airtight packages for meat and cheese products. The AirPac system is more expensive to use but guarantee to cut packaging reject costs in half. The cost for the AirPac system is $15,300. The purchasing company experienced a net savings of $5,100 during its first year of usage. Calculate the return on investment (ROI).

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Definitions:

Depreciation Expense

The allocated amount of an asset’s cost expensed over its useful life to account for the decline in its value over time.

Freight Charges

Fees associated with the transportation of goods from one location to another.

Double-Declining-Balance

An accelerated method of depreciation that computes depreciation at twice the straight-line depreciation rate.

Depreciation Expense

Depreciation expense represents the systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.