Question

Plasticworks corporation bought a machine at the beginning of the year at a cost of $12,000. the estimated useful life was five years, and the residual value was $2,000. assume that the estimated productive life of the machine is 10,000 units. expected annual production was: year 1, 3,000 units; year 2, 3,000 units; year 3, 2,000 units; year 4, 1,000 units; and year 5, 1,000 units.

required: 1. complete a depreciation schedule for each of the alternative methods.

Answer 1

To determine the most cost-effective production method for a corporation following a decrease in machine costs, the total costs for each combination of labor and machines must be calculated. The corporation will choose the method that offers the lowest total cost while considering strategic implications of labor versus capital

Step-by-step explanation:

The student's question involves calculating the depreciation for equipment using different methods and making a decision on the most cost-effective production method for a corporation given changes in the cost structure. When the cost of machines decreases to $50 and labor cost remains at $40, a corporation would need to compare the total costs for different combinations of labor and machine units used in production. For example, if Method 1 uses 50 units of labor and 10 units of capital, Method 2 uses 20 units of labor and 40 units of capital, and Method 3 uses 10 units of labor and 70 units of capital, the total cost would be calculated for each method and the firm would choose the most cost-effective one. Considering the provided cost per unit of labor ($100 or $200) and per unit of capital ($400), the corporation must assess which production method minimizes costs and aligns with their strategic goals, such as whether to employ more labor or capital.