Question

Fogelberg Company purchased equipment for $30,000. Sales tax on the purchase was $1,500. Other costs incurred were freight charges of $400, repairs of $700 for damage during installation, and installation costs of $450. What is the cost of the equipment?

a. $30,000.
b. $31,500.
c. $32,350.
d. $33,050.

Answer 1

The total cost of the equipment for Fogelberg Company is $32,350, which includes the purchase price, sales tax, freight charges, and installation costs but excludes the repair costs.

Step-by-step explanation:

The cost of equipment for the Fogelberg Company includes the purchase price plus any additional costs necessary to get the equipment ready for use. The purchase price of the equipment is $30,000. To this, we add the sales tax of $1,500, the freight charges of $400, and the installation costs of $450. However, we do not include the repairs for damage during installation as this is not a necessary cost to get the equipment ready for use. Therefore, the total cost of the equipment is the sum of the purchase price, sales tax, freight charges, and installation costs, which equals $32,350 (Option c).