Alzparker Company Constructed a Building at a Total Actual Cost

question 134

Multiple Choice

Alzparker Company constructed a building at a total actual cost of $30,000,000. Weighted-average accumulated expenditures during the construction period amounted to $23,000,000. As a result of financing arrangements, actual interest was $1,820,000, and avoidable interest was $1,600,000. What is the capitalized cost of the building?

• A) $24,820,000
• B) $31,600,000
• C) $31,820,000
• D) $33,420,000

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Definitions:

Financial Break-even

The point at which total revenue equals total costs and expenses, resulting in no net loss or gain.

Variable Costs

Expenses that vary directly with the volume of production or the degree of activity within a company.

Fixed Costs

Costs that do not vary with the volume of production or level of activity within a certain range. These are expenses that must be paid regardless of business activity, such as rent or salaries.

Required Return

The minimum expected yield by investors as compensation for the level of risk associated with an investment.