Plastic Moulds Purchased Equipment on January 1, 2009 for $275,000

question 59

Multiple Choice

Plastic Moulds purchased equipment on January 1, 2009 for $275,000. It was estimated that the equipment would have a residual value of $25,000 at the end of its useful life. The asset's useful life was estimated at 5 years or 10,000 units of output. The company has a December 31 year end. Additional information: Assuming the company uses the units-of-production depreciation method, what is the depreciation rate per unit for 2009?

• A)$25.00
• B)$27.50
• C)$57,750
• D)$52,500

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Definitions:

Direct Labour Budget

A financial plan that estimates the cost of direct labor required to meet production goals.

Selling

The process of promoting and selling goods or services, including marketing and advertising strategies.

Administrative Expense

Expenses incurred in the process of running a company that are not directly tied to a specific product or service, such as salaries of senior executives.

Responsibility Accounting

A system of accountability in which managers are held responsible for those items of revenue and cost—and only those items—over which they can exert significant control. The managers are held responsible for differences between budgeted and actual results.