Rayco Products manufactures audio speakers that are used in many applications. At the beginning of the current
Question:
Rayco Products manufactures audio speakers that are used in many applications. At the beginning of the current year, Rayco developed detailed operating budgets for all aspects of the company. Rayco now is considering purchasing new test equipment for the inspection department to use in checking the acoustical quality of speakers. This purchase was not considered during the preparation of operating budgets for the current year. If the equipment is acquired, depreciation will begin to be recognized immediately, using straight-line depreciation over an estimated useful life of five years; the result will be a monthly charge of \(\$ 2,200\). What effect would the equipment purchase have on quality costs and on meeting the company's current year budget?
Step by Step Answer:
Managerial Accounting Information For Decisions
ISBN: 9780324222432
4th Edition
Authors: Thomas L. Albright , Robert W. Ingram, John S. Hill