On January 1,2013,Zane Manufacturing Company Purchased a Machine for $40,000

question 79

Multiple Choice

On January 1,2013,Zane Manufacturing Company purchased a machine for $40,000.The company expects to use the machine a total of 24,000 hours over the next 6 years.The estimated sales price of the machine at the end of 6 years is $4,000.The company used the machine 8,000 hours in 2013 and 12,000 in 2014.
- What is the book value of the machine at the end of 2014 if the company uses units-of-production depreciation?

• A) $20,000
• B) $10,000
• C) $17,778
• D) $28,000

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Definitions:

Base-Year Prices

Prices from a specific base year that are used to calculate real values or quantities, allowing for the comparison of economic data over time by removing the effects of inflation.

Laspeyres Index

A price index calculated by taking the ratio of the total cost of purchasing a specified set of goods and services in a given period to the cost of purchasing the same set of goods and services during a base period, using base period quantities for weighting.

Nominal Income

The amount of money earned in current dollars, without adjustment for inflation or purchasing power.

Revealed Preference

An economic theory that determines preferences by observing consumer choices and behaviors rather than through direct inquiry.