RoboCop Company Paid $31,400 for a Machine That Was Expected

question 63

Essay

RoboCop Company paid $31,400 for a machine that was expected to last 5 years and have a residual value of $5,000.During the fourth year of the machine's life,$5,400 was paid for repairs that were expected to increase the service life of the machine from 5 to 7 years.Prepare the general journal entry to record this transaction.

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Definitions:

Marginal Cost

Marginal cost is the additional cost incurred from producing one extra unit of a good or service, an important concept in economics for determining optimal production levels.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the quantity of output, a key factor in pricing and profitability analyses.

Marginal Revenue

The additional income generated from selling one more unit of a product or service.

Profit-Maximizing

A strategy or point where a firm produces at a level where its marginal cost equals marginal revenue, maximizing its profit.