Sam recently bought a cafe. His first order of business was to spend $150,000 on high quality equipment and fittings for the cafe. The expected life of these assets will be 6 years and the residual value of these assets is $0. Use the following information below to assist you in answering the following questions:

a) Work out the depreciation of these assets using the straight-line method (assume the equipment was purchased the same year as the figures below).

b) Work out the total expenses benchmark using the total expenses/turnover * 100 ratio

Important information:

Sales - $1,639,413

Contribution from owners - $450,000

Payments for inventory - $971,672

Payments for wages - $193,891

Payments for rates and utilities - $21,500

Payment for equipment and fittings - $150,000

Payment for insurance - $34,400

Payment for rent - $210,000

Answer rating: 100% (QA)

a Straight Line Depreciation Cost of Asset Residual Value Useful life of years Cost of Asset 1... View the full answer