Question

1. Broadeak has recently purchased an item of plant from Planter), the details of this are

                                                                                             $

Basic List Price of Plant                                              240,000

Trade Discount 12.5% on list price.

Ancillary costs:

Shipping and Handling Cost                                              2,750

Pre-Production Testing                                                     12500

Maintenance Cost                                                             24000

Site Preparation Cost

Electrical Cable Installation                                              14000

Concrete Reinforcement                                                     4500

Own Labour Cost                                                               7500

                                                                                 

Broadoak paid for the plant (excluding the ancillary costs} within four weeks of order, thereby obtaining an early settlement discount of 10%.

Broadoak had incorrectly Specified the Power loading of the original electrical cable to be installed by the contractor_ The cost of correcting this error of $6000 is included in the above figure of$14,000.The plant is expected to last for 10 years. At the end of tenth year there will be

compulsory costs of $15000 to dismantle the plant and $3,000 to restore the site to its original use condition_

Required: Calculate the amount at which the initial cast of the plant should be measured   

Answer 1