Question

Whole Grain Bakery purchases an industrial bread machine for $26,000. In addition to the purchase price, the company makes the following expenditures: freight, $1,600; installation, $3,200; testing, $1,100; and property tax on the machine for the first year, $520. What is the initial cost of the bread machine?

Answer 1

The initial cost of the bread machine is $31,900.

Step-by-step explanation:

Given:

Whole Grain Bakery purchases an industrial bread machine for $26,000. In addition to the purchase price, the company makes the following expenditures: freight, $1,600; installation, $3,200; testing, $1,100; and property tax on the machine for the first year, $520.

Now, to find out the initial cost of the bread machine.

Purchase price of bread machine = $26,000.

Freight expenses = $1,600.

Installation = $3,200.

Testing = $1,100.

Now, to get the total cost of the machine we add purchase price of the bread machine, freight expenses, installation and testing:

Total cost of the machine = purchase price + fright expenses + installation + testing.

`Total\ cost\ of\ the\ machine = 26,000+1,600+3,200+1,100\\\\Total\ cost\ of\ the\ machine = 31,900.`

Thus, the total cost of the bread machine = $31,900.

As, the property tax on the machine is not included in cost of machine, because of it being recurring expense and is paid annually.

Therefore, the initial cost of the bread machine is $31,900.