Use the Following Data for Questions 10 Through 17

question 83

Essay

Use the following data for questions 10 through 17. Each question is independent of the other questions.
Sawyer Corporation has a machine (Machine A) that it acquired on 1/1/14 for $540,000. On 12/31/14 such machines have a selling price and fair value of $621,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
Brown Corporation has a machine (Machine B) that it acquired on 1/1/14 for $729,000. On 12/31/14 such machines have a selling price and fair value of $540,000. When used in production, such machines have an estimated useful life of 10 years with no salvage value. Use the straight-line method.
On 12/31/14 Brown gave Machine B plus $81,000 cash to Sawyer in return for
Machine A.
-Assignment of Costs.Match the following cost items with these appropriate accounts:1. Interest cost incurred during building construction.2. Back taxes on purchased plot of land to be used for building site.3. Assessment by city for drainage system.4. Building permits.5. Landscaping shrubs planted after building has been constructed.6. Demolition costs of building on land bought for plant site.7. Interest cost incurred after completion of building construction.8. Recording fees for land.9. Architect's fees.10. Grading and filling building site.11. Parking lots.12. Fences.
a. Land
b. Buildings
c. Land Improvements
d. Other

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Definitions:

Variable Costs

Expenses that fluctuate in direct proportion to changes in productive output or other measures of volume.

Operating Leverage

Operating leverage refers to the extent to which a company can increase its operating income by increasing revenue, highlighting the proportion of fixed costs in a company's cost structure.

Capital Intensive

A business process or industry that requires significant financial investment in capital assets like machinery and equipment, versus labor or operational costs.

Fixed Costs

Expenses that do not change with the level of production or business activity.