A Company Purchased a Weaving Machine for $190,000

question 116

Multiple Choice

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a salvage value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the book value of the machine at the end of the second year?

• A)$108,400.
• B)$144,400.
• C)$81,600.
• D)$190,000.
• E)$180,000.

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Definitions:

Mixed Costs

Expenses that contain both fixed and variable components, changing in total with the level of activity.

Contribution Margin

The amount left from sales revenue after variable costs are subtracted, contributing to covering fixed costs and generating profit.

Merchandising Company

Businesses that buy finished goods and sell them at a profit without modifying the product, focusing on distribution rather than production.

Sales Revenue

The income generated from the sale of goods or services before any costs or expenses are deducted.