Worf Co. both purchases and constructs various equipment it uses in its operatio

Question

Worf Co. both purchases and constructs various equipment it uses in its operations. The following items for two different types of equipment were recorded in random order during the calendar year 2014.

Compute the total cost for each of these two pieces of equipment.

Purchase Cash paid for equipment, including sales tax of $16,495 $346,395 Freight and insurance cost while in transit 6,598 Cost of moving equipment into place at factory 10,227 Wage cost for technicians to test equipment 13,196 Insurance premium paid during first year of operation on this equipment 4,949 Special plumbing fixtures required for new equipment 26,392 Repair cost incurred in first year of operations related to this equipment 4,289 Construction Material and purchased parts (gross cost $659,800; failed to take 1% cash discount) $659,800 Imputed interest on funds used during construction (stock financing) 46,186 Labor costs 626,810 Allocated overhead costs (fixed-$65,980; variable-$98,970) 164,950 Profit on self-construction 98,970 Cost of installing equipment 14,516

Explanation / Answer

Calculation of cost of the equipment :

cash paid for equipment = $ 346395

Freight and insurance while in transit = $ 6.598

Cost of moving equipment to factory = $ 10227

wage cost for technisians = $ 13196

Special plumbing fixtures = $ 26,392

Purchase of equipment = $ 402,808

Construction of equipment :

material and puchased parts = $ 659,800

Interest on funds = $ 46,186

Labor costs = $ 626,810

Allocated overhead = $ 98,970

Total cost of construction = $ 143,1766

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