A Used Machine with a Purchase Price of $75 000,requiring

question 20

Multiple Choice

A used machine with a purchase price of $75 000,requiring an overhaul costing $8000,installation costs of $4000 and testing costs of $2000,would have a cost basis of:

• A) $75 000.
• B) $83 500.
• C) $87 000.
• D) $89 000.

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Definitions:

Factory Utilities

Expenses incurred for electricity, gas, water, and sewage services used in the operation of a manufacturing plant or factory.

Plantwide Overhead Rate

A single rate used to allocate manufacturing overhead costs to all units produced, regardless of the department in which they were made.

Labor Intensive

A process or industry that requires a large amount of labor to produce its goods or services, as opposed to being heavily automated.

Mechanized Work

Work processes that are performed using machinery and equipment to enhance efficiency and productivity.