On April 1, 2018, Parks Co

question 14

Essay

On April 1, 2018, Parks Co. purchased machinery at a cost of $42,000. The machinery is expected to last 10 years and to have a residual value of $6,000.
-Compute depreciation for 2018 and 2019 and the book value of the machinery at December 31, 2018 and 2019, assuming double-declining balance method is used.

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Definitions:

Average Fixed Costs

The sum of all fixed production costs divided by the number of units produced.

Total Costs

The sum of all expenses a firm incurs in the production of goods or services, including both fixed and variable costs.

Average Fixed Cost

The constant expenses associated with production, which remain unchanged regardless of output levels, divided by the output quantity.

Average Variable Cost

The total variable costs divided by the quantity of output produced, reflecting the cost for each unit excluding fixed costs.