Question

Manning Company purchased a factory for $120,000. The factory included land, a building, and equipment. The land contributes 40.8%, the building contributes 49.6%, and the equipment contributes 9.6% of the factory’s value. How much of the cost should be assigned to the building?

Answer 1

• All working forms part of the answer
• Working

	Cost to be allocated	% of contribution	Amount assigned
	[A]	[B]	[C = A x B]
Land	$          120,000.00	40.80%	$           48,960.00
Building	$          120,000.00	49.60%	$           59,520.00 = Answer
Equipment	$          120,000.00	9.60%	$           11,520.00

• Answer: The cost that is to be assigned to Building = $ 59,520