A Truck Costing $112,000 Is Paid Off in Monthly Installments

question 55

Multiple Choice

A truck costing $112,000 is paid off in monthly installments over four years with 8% APR.After three years the owner wishes to sell the truck.What is the closest amount from the following list that he needs to pay on his loan before he can sell the truck?

• A)$24,867
• B)$28,678
• C)$31,432
• D)$87,255

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Definitions:

Equivalent Unit

A metric used in cost accounting to express the amount of work done on incomplete units as a proportion of work done on complete units.

Factory Overhead

Refers to the indirect costs associated with manufacturing, excluding direct materials and direct labor costs.

Direct Labor

Direct labor involves the work of employees that can be directly attributed to the production of specific goods or services.

Direct Materials

The raw materials that are traceable directly to the production of a specific good or product, forming an integral part of the finished product.