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please answer with good explanation and working VB firm want to expand their business, and is about to the aoquire awarehouse. The warehouse costs 130,000
please answer with good explanation and working
VB firm want to expand their business, and is about to the aoquire awarehouse. The warehouse costs 130,000 to buy. The cost of the existing warehouse was ?0,000 but it would now sell for 110,000. Fittings in the existing warehouse will be sold for 5,000 and a new refit for both warehouses together will cost 20,000. The cost of the refit will be depreciated at a rate of 4,000 per annum. The new warehouse will be depreciated by 7,000 per annum.The employment cost of the manager of the existing warehouse is 25,000 per annum. He will spend half histime on the new part of the expanded warehouse. An additional part-time assistant will the at a cost of 10,000. Heating and lighting for the new warehouse space will cost 6,000 per annum but there will be a saving of 1,000 on the fixed costs of the heating and lighting contracts for the existing warehouse. Required: Should VB firmacquire the warehouse? Explain your decision using relevant costing. (13 marks)Step by Step Solution
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