On January 1, 2016, Check Co

question 5

Essay

On January 1, 2016, Check Co. bought a machine for $15,000. Residual value was estimated to be $1,400 and a five- year life was used for straight-line depreciation. On January 1, 2018, it was estimated that the total life from acquisition date should have been six years and residual value should have been estimated at $600.
Required:
Compute depreciation expense for 2018.

Understand the concept of activity-based costing and how it differs from traditional costing systems.

Calculate predetermined overhead rates based on different bases (machine-hours, direct labor-hours, capacity).

Identify unused capacity cost and its implications on financial statements.

Analyze the effect of overhead allocation on product costs and pricing strategies.