Minor Company Installs a Machine in Its Factory at the Beginning

question 5

Multiple Choice

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product.
- Determine the machines' first year depreciation under the straight-line method.

• A) $27,000.
• B) $23,779.
• C) $25,800.
• D) $29,025.
• E) $24,000.

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Definitions:

Delivery Cycle Time

The total time taken from receiving a customer order to delivering the finished product to the customer, encompassing all stages of the order processing and production process.

Turnover

The rate at which inventory or assets of a business are replaced or sales are made over a specific period.

Margin

Generally refers to the difference between the selling price of a good or service and its cost, expressed as a percentage of the selling price.

Residual Income

The income that remains after deducting all required costs of capital from operating income, used as a measure of profitability.