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8 May, 10:16

Whole Grain Bakery purchases an industrial bread machine for $30,000. In addition to the purchase price, the company makes the following expenditures: freight, $2,000; installation, $4,000; testing, $1,500; and property tax on the machine for the first year, $600. What is the initial cost of the bread machine?

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  1. 8 May, 13:01
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    The initial cost of the bread machine is $37,500

    Explanation:

    Initial cost is the sum of all the expenditure incurred from the purchase of asset to make it usable for the business. It includes purchase price, transportation cost, testing costs etc.

    Bread Machine

    Purchase price $30,000

    Freight $2,000

    Installation $4,000

    Testing $1,500

    Total Initial Cost $37,500
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