A Company Acquired Some Land for $75,000 to Construct a New

question 29

Multiple Choice

A company acquired some land for $75,000 to construct a new office complex.Legal fees paid were $2,750, delinquent taxes assumed were $3,250, and $6,350 was paid to remove an old building.Materials salvaged from the demolition of the building were sold for $2,300.Determine the cost of the land to be reported on the balance sheet.

• A) $85,050
• B) $89,650
• C) $84,100
• D) $87,350

---

Definitions:

Direct Labor-Hours

The total hours of labor directly involved in producing goods, often used as a basis for allocating overhead in cost accounting.

Overhead Cost

Refers to ongoing operational expenses that cannot be directly attributed to a specific product or production activity, such as office expenses, rent, and administrative salaries.

Activity-Based Costing

A costing methodology that assigns costs to products or services based on the activities they require for production.

Machine-Hours

A measure of production time using machinery, often used as a basis for allocating manufacturing overhead to products.