A Company Is Considering Purchasing a Machine for $123,000

question 22

Short Answer

A company is considering purchasing a machine for $123,000.The machine is expected to generate a net after-tax income of $8,200 per year.Depreciation expense would be $12,300.What is the payback period for this machine?

---

Definitions:

Production Department

The division of a business focused on the creation and manufacture of goods.

Manufacturing Processes

A series of steps or operations used to transform raw materials into finished goods through physical, chemical, or mechanical measures.

Plantwide Factory Overhead Rate

A single overhead absorption rate used throughout an entire plant or factory to allocate indirect costs to products uniformly.

Budgeted Factory Overhead

An estimate of the total indirect manufacturing costs that will be incurred to support operations during a specified period.