Longbow Lumber Is Purchasing a New Horizontal Resaw at a Cost

question 39

Multiple Choice

Longbow Lumber is purchasing a new horizontal resaw at a cost of $450,000.There is an additional $15,000 delivery and installation cost.The machine has a capital cost allowance (CCA) rate of 25%.What is the incremental undepreciated capital cost (UCC) for year 1?

• A)$232,500
• B)$450,000
• C)$225,000
• D)$465,000
• E)$435,000

---

Definitions:

Controllable Variance

Controllable variance refers to the difference between actual and expected figures that can be influenced by the actions of managers.

Overhead Costs

General expenses related to the operation of a business that are not directly attributed to creating a product or service.

Volume Variance

The difference between the budgeted and actual quantity of units sold or produced, affecting budget and operational planning.

Fixed Overhead

The costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.