Question Details

Huffman Corporation constructed a building 



1.	During self-construction of an asset by Samuelson Company, the following were among the costs incurred:
Fixed overhead for the year	$1,000,000
Portion of $1,000,000 fixed overhead that would
	be allocated to asset if it were normal production	40,000
Variable overhead attributable to self-construction	35,000
	What amount of overhead should be included in the cost of the self-constructed asset? 
a.	$   -0-
b.	$35,000
c.	$40,000
d.	$75,000

2.	During self-construction of an asset by Richardson Company, the following were among the costs incurred:
Fixed overhead for the year	$1,000,000
Portion of $1,000,000 fixed overhead that would
	be allocated to asset if it were normal production	60,000
Variable overhead attributable to self-construction	55,000
	What amount of overhead should be included in the cost of the self-constructed asset? 
a.	$   -0-
b.	$ 55,000
c.	$ 60,000
d.	$115,000

	3.	Mendenhall Corporation constructed a building at a cost of $10,000,000. Average accumulated expenditures were $4,000,000, actual interest was $600,000, and avoidable interest was $300,000. If the salvage value is $800,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is
a.	$237,500.
b.	$245,000.
c.	$257,500.
d.	$337,500.

	4.	Messersmith Company is constructing a building. Construction began in 2010 and the building was completed 12/31/10. Messersmith made payments to the construction company of $1,000,000 on 7/1, $2,100,000 on 9/1, and $2,000,000 on 12/31. Average accumulated expenditures were
a.	$1,025,000.
b.	$1,200,000.
c.	$3,100,000.
d.	$5,100,000.

	5.	Huffman Corporation constructed a building at a cost of $20,000,000. Average accumulated expenditures were $8,000,000, actual interest was $1,200,000, and avoidable interest was $600,000. If the salvage value is $1,600,000, and the useful life is 40 years, depreciation expense for the first full year using the straight-line method is
a.	$475,000.
b.	$490,000.
c.	$515,000.
d.	$675,000.




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