Morton Company purchased two machines at an industrial auction. It paid $120,000 for the two machines together, even though machine #1 was appraised at $62,000 and machine #2 was appraised at $70,000.
The company spent $5,000 transporting the two machines to its plant. It spent $6,000 installing machine #1, whereas machine #2 just had to be plugged in. Repairs to get the machines in working order totalled $3,000 for machine #1 and $16,000 for machine #2. Some repairs had been anticipated when the company purchased the machines, but the repair costs for machine #2 were $12,000 higher than expected. The repairs were deemed essential and both machines now work well.
Required:
Calculate the total cost that should be capitalized for each machine.