Question

Mist City Car Wash purchased a new brushless car-washing machine for one of its bays. The machine cost $32,300. Mist City borrowed the purchase price from its bank on a one-year, 8 percent note payable. Mist City paid $1,250 to have the machine transported to its place of business and an additional $275 in shipping insurance. Mist City incurred the following costs as a part of the installation:
Plumbing................ $2,700
Electrical ............... 1,640
Water (for testing the machine) ...... 35
Soap (for testing the machine) ...... 18
During the testing process, one of the motors became defective when soap and water entered the motor because its cover had not been installed properly by Mist City’s employees. The motor was replaced at a cost of $450.

Required:
1. Compute the cost of the car-washing machine.
2. Explain why any costs were excluded from the cost of the machine.


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  • CreatedSeptember 22, 2015
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