Question

At the beginning of the year, Grillo Industries bought three used machines from Freeman Incorporated. The machines immediately were overhauled, were installed, and started operating. Because the machines were different, each was recorded separately in the accounts.

Machine A Machine B Machine C
Cost of the asset $10,800 $40,000 $23,800
Installation costs 950 3,900 3,000
Renovation costs prior to use 750 3,500 4,000
Repairs after production began 700 900 2,500

By the end of the first year, each machine had been operating 8,000 hours.

Required:
Compute the cost of each machine.

Answer 1

the cost of machine for A, B and C is $12,500, $47,400 and $30,800 respectively

Step-by-step explanation:

The computation of the cost of the machine is given below:

For Machine A

= $10,800 + $950 + $750

= $12,500

For Machine B

= $40,000 + $3,900 + $3,500

= $47,400

And, for machine C

= $23,800 + $3,000 + $4,000

= $30,800

Hence, the cost of machine for A, B and C is $12,500, $47,400 and $30,800 respectively