# Strong Metals Inc. purchased a new stamping machine at the beginning of the year at a cost of \$1,567,500. The estimated residual value was \$82,500. Assume that the estimated useful life was five years and the estimated productive life of the machine was 300,000 units. Actual annual production was as follows: Year Units 1 70,000 2 67,000 3 50,000 4 73,000 5 40,000 Required: 1. Complete a separate depreciation schedule for each of the alternative methods. a. Straight-line. b. Units-of-production. c. Double-declining-balance.

The question seeks the computed depreciation for a machine for 5 years under three methods: straight-line, units-of-production, and double-declining balance. The computations were conducted using the provided data.

### Explanation:

To answer this question, we first need to understand the terms constant that would be used throughout the computation: Machine cost, residual value, useful life, and productive life. In this scenario, the calculation would be as follows:

1. Straight-line method: Depreciation per year = (Cost - Residual value) / Useful life. So, (\$1,567,500 - \$82,500) / 5 = \$297,000. Your depreciation expense is \$297,000 per year for 5 years.
2. Units-of-production method: Depreciation per unit = (Cost - Residual value) / Productive life. Our depreciation per unit is (\$1,567,500 - \$82,500) / 300,000 = \$4.95. To get yearly depreciation, this needs to be multiplied by the number of units produced each year.
3. Double-declining-balance method: Depreciation = 2 * Straight-line rate * Remaining book value. The first year’s depreciation would be 2/5 * (Machine cost - accumulated depreciation), and for the following years, subtract the previous year's depreciation from the machine cost.

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Straight-line depreciation distributes the cost equally across the useful lifespan. The units-of-production method bases depreciation on the amount of production output. The double-declining balance method is an accelerated depreciation method that doubles the straight-line rate and uses the remaining book value for its calculations.

### Explanation:

The cost of the machine is \$1,567,500, and the residual value at the end of five years would be \$82,500. Hence, the depreciable amount would be (\$1,567,500 - \$82,500) = \$1,485,000.

For each of the desired methods, the depreciation schedules would be as follows:

• Straight-line Method: This method would equally spread the depreciable amount over the useful life of the asset. Each year, the company would depreciate (\$1,485,000/5) = \$297,000.
• Units-of-Production Method: This method bases the depreciation on the number of units produced. The depreciation rate per unit is calculated as (\$1,485,000/300,000) = \$4.95/unit. So, for each year, we need to multiply the rate by the units produced to obtain the annual depreciation.
• Double-Declining-Balance Method: For this method, we first calculate the straight-line depreciation rate, which in this case is (1/5 = 20%). We double that rate to get the accelerated depreciation rate of 40%. Each year, we multiply this rate by the book value at the beginning of the year to get the annual depreciation. However, in the final year, this method ensures that the residual value is observed.

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## Related Questions

An effective goal program has goals that are​ specific, consistent, and appropriately challenging. What is​ missing?

Feedback

Explanation:

In an effective goal program, feedback is very important and essential. The goals should be open for feedback. If the goals are specific, consistent but lack feedback, then it is no longer effective.

Feedback is important in order to evaluate how effective the goal is. So, in the above, feedback is what is missing.

Running vertically down the market-product grid, each column represents an opportunity for efficiency in A. A product grouping. B. supplier synergies. C. a market segment. D. research and development

Explanation:

In the product synergy system, the each column representing about the opportunity for the efficiency in the research and the development.

The product synergy is one of the concept that helps in explain about the holistic view of an organization where the various types of material and also the energy are get exchange from one unit to another.

The research and the development plays an important role in the industry as it helps in introducing the new innovated products and the services in the market and maintaining the organizational productivity and the bottom line.

Therefore, Option (D) is correct answer.

Retain the small predictable layers of risk and transfer the unpredictable catastrophic layer of risk. Does this statement promote appropriate risk financing decision making

Yes the statement does

Explanation:

Retaining small predictable layers of risk and transferring the unpredictable catastrophic layer of risk to a more capable body is a very good approach towards  promoting appropriate risk financing decision making, this is because

Financial risk decisions are decisions taken between alternatives i.e risks associated with business activities . it is more appropriate to take alternatives with a predictable layer of risk,that way it would be easier for the management to handle the risk associated with it, while transferring the unpredictable catastrophic layer of risk to a more capable body ,like the Insurance companies .

Precious CurlsPrecious Curls is a retail chain specializing in​ salon-quality hair-care products. During the​ year, Precious CurlsPrecious Curls had sales of \$ 39 comma 388 comma 000\$39,388,000. The company began the year with \$ 3 comma 500 comma 000\$3,500,000 of merchandise inventory and ended the year with \$ 4 comma 445 comma 000\$4,445,000 of inventory. During the​ year, Precious CurlsPrecious Curls purchased \$ 23 comma 350 comma 000\$23,350,000 of merchandise inventory. The​ company's selling,​ general, and administrative expenses totaled \$ 5 comma 450 comma 000\$5,450,000 for the year. Prepare Precious Curls'Precious Curls' income statement for the year.

Instructions are listed below

Explanation:

Giving the following information:

Sales= \$39,388,000.

The company began the year with:

\$3,500,000 of merchandise inventory

Ended the year with:

\$4,445,000 of inventory.

During the​ year:

Purchased \$23,350,000 of merchandise inventory.

The​ company's selling,​ general, and administrative expenses totaled \$5,450,000 for the year.

First, we need to calculate the cost of goods sold:

COGS= beginning merchandise inventory + purchases - ending merchandise inventory

COGS= 3,500,000 + 23,350,000 - 4,445,000= \$22,405,000

Income statement:

Sales= 39,388,000

COGS= 22,405,000

Gross income= 16,983,000

Selling,​ general, and administrative expenses= 5,450,000

Operating income= \$11,533,000

The Talley Corporation had taxable operating income of \$495,000 (i.e., earnings from operating revenues minus all operating costs). Talley also had (1) interest charges of \$40,000, (2) dividends received of \$20,000, and (3) dividends paid of \$25,000. Its federal tax rate was 21% (ignore any possible state corporate taxes). Recall that 50% of dividends received are tax exempt. What is the firm’s taxable income? Round your answer to the nearest dollar.

Explanation:

To calculate the Taxable income we would have to adjust the figure for dividends received as well as interest.

Now, 50% of dividends received are taxable so let's adjust for that first,

= 20,000 * 0.5

= \$10,000

\$10,000 of dividends are taxable.

To calculate the Taxable income we have to use the following formula,

Taxable income = Income after operating Costs - Interest Charges + Taxable dividends

= 495,000 - 40,000 + 10,000

= \$465,000

That Taxable income is therefore \$465,000

Note: The dividends paid are not included here because they are taxable and already included in the Taxable operating income so including it again would amount to Double Counting.

If you need any clarification do react or comment.

Answer: Firm's taxable income = \$465,000

Explanation:

GIVEN the following :

Taxable operating income = \$495,000

Interest charges = \$40,000

Firm's taxable income =?

NOTE: 50% of dividend received is tax exempt.

Therefore,

0.5 × \$20,000 = \$10,000

Taxable portion of dividend received = \$20,000 - \$10,000

Taxable dividend = \$10,000

Taxable income = (Taxable operating income + taxable dividend) - interest charges

Taxable income = ( \$495,000 + \$10,000) - \$40,000

Taxable income = \$505,000 - \$40,000

Firm's taxable income = \$465,000

Rooney Company established a predetermined variable overhead cost rate at \$9.40 per direct labor hour. The actual variable overhead cost rate was \$8.40 per hour. The planned level of labor activity was 74,900 hours of labor. The company actually used 79,900 hours of labor. Required Determine the total flexible budget variable overhead cost variance and indicate the effect of the variance by selecting favorable (F) or unfavorable (U). (Select "None" if there is no effect (i.e., zero variance).)

\$32,900 favorable

Explanation:

The computation of the total flexible budget variable overhead cost variance is shown below:

where,

= \$9.40 × 74,900 hours

= \$704,060

And, the actual budgeted overhead cost is

= \$8.40 × 79,900 hours

= \$671,160

So, the total flexible budget variable overhead cost variance is

= \$704,060 - \$671,160

= \$32,900 favorable

Since the standard cost is greater than the actual cost so it would have favorable variance