Minor Company Installs a Machine in Its Factory at the Beginning

question 40

Multiple Choice

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000.The machine's useful life is estimated to be 5 years,or 300,000 units of product,with a $15,000 salvage value.During its first year,the machine produces 64,500 units of product.Determine the machines' first year depreciation under the units-of-production method.

• A)$27,000.
• B)$54,000.
• C)$24,000.
• D)$25,800.
• E)$48,000.

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Definitions:

World Price

The international market price of a good or service, influenced by global supply and demand conditions.

Domestic Supply

The total amount of goods and services provided by a country's own economy without importing from other countries.

Imported

Describes goods or services brought into one country from another for sale, usually regulated by import quotas and tariffs.

Economies Of Scale

The cost advantages that enterprises obtain due to their scale of operation, leading to a reduced cost per unit of output.