An Asset Cost $13,000; Estimated Residual Value, $1,000, and Estimated

question 133

Essay

An asset cost $13,000; estimated residual value, $1,000, and estimated life: $\begin{array}{|l|l|}\hline \text { In years } & 5 \\\hline \text { In running time (hours) } & 3.000 \text { Actual in Year 1 - 700 hours } \\\hline \text { In productive output (units) } & 10,000 \text { Actual in year 1 - } 2.000 \text { units } \\\hline\end{array}$
Compute the following: $\begin{array}{|l|l|l|}\hline \text { Method } & \text { Amortization Expense-Year 1 }&\text { Carrying Value End of Year } 1 \\\hline \text { A } & \text { Straight-line }&\$\_\_\_ \\\hline \text { B } & \text { Service hours } &\$\_\_\_ \\\hline \text { C } & \text { Productive output } &\$\_\_\_ \\\hline \text { D } & \text { SYD } &\$\_\_\_ \\\hline \text { E } & \text { Double declining balance } &\$\_\_\_ \\\hline\end{array}$

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Definitions:

Product Cost

The total cost associated with manufacturing a product, including direct materials, direct labor, and manufacturing overhead.

Period Cost

Expenses that are not directly tied to the production process and are expensed in the period they are incurred, such as selling and administrative expenses.

Machinery Repairs

Expenditures incurred in fixing and maintaining machinery to ensure operational efficiency and extend its service life.

Product Cost

The total cost incurred to produce and prepare a product for sale, including materials, labor, and overhead expenses.