Figure 3-1 ALF Systems Undertakes Its Own Machine Maintenance

question 14

Multiple Choice

Figure 3-1 ALF Systems undertakes its own machine maintenance.The depreciation on the equipment is $20,000 per year and operating cost is $2 per machine hour.Last year 275,000 machine hours were used to produce 100,000 units.
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See Figure 3-1.Develop a cost equation for the total machine maintenance cost.

• A) Y= $275,000
• B) Y = $20,000
• C) Y = $20,000 + $2 MHR
• D) Y = $2 MHR

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Definitions:

Financial Statements

Comprehensive reports created to present a company's financial performance, financial position, and cash flows over a specific period.

Audit Report

A formal statement issued by an auditor at the conclusion of an audit process, summarizing their opinion on an entity's financial statements.

Retained Earnings

The portion of net income not distributed as dividends but retained by the company for reinvestment or to pay debt.