For Each Transaction Numbered 1 Through 6 Below, Identify Which

question 25

Essay

For each transaction numbered 1 through 6 below, identify which accounting treatment-capitalized or expensed-should be used to properly account for the transactions. You may use each letter more than once or not at all.
______1. Freight costs on production equipment in transit
______2. Sales tax on equipment purchase
______3. Damaged during installation and repair costs
______4. Interest paid on construction loan during the building period
______5. Survey costs by contractor
______6. Construction insurance to cover theft or vandalism during building construction

---

Definitions:

Unit Selling Price

The amount of money charged to the customer for a single unit of product or service.

Contribution Margin

The difference between sales revenue and variable costs, representing the amount that contributes to covering fixed costs and generating profit.

Contribution

The portion of sales revenue that exceeds variable costs, contributing towards covering fixed costs and generating profit.

Machine Hour

A measurement of production time, quantifying the number of hours a machine is in operation during a given period.