On August 1, 2017, Dahomey Corp

question 60

Multiple Choice

On August 1, 2017, Dahomey Corp.purchases a new machine.The company makes a $6,000 cash down payment, and agrees to pay four monthly instalments of $9,000 each, starting September 1, 2017, signing a non-interest bearing note to this effect.The cash equivalent price of the machine is $36,000.As well, Dahomey pays installation costs of $1,000.The recorded cost of the machine should be

• A)$7,000.
• B)$37,000.
• C)$42,000.
• D)$43,000.

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Definitions:

Raw Materials Inventory

Raw materials inventory refers to the stock of raw materials on hand at any given time that are made available for use in the production process.

Fixed Costs

Expenses that do not change in total with changes in the level of production or sales, such as rent, salaries, and insurance.

Relevant Range

The range of activity within which the assumptions about variable and fixed cost behaviors remain valid.

Per Unit Basis

A method of calculating financial figures or metrics for each individual unit of production or sale.