Analyze the following scenario: River County is planning several capital acquisitions for the coming year. These include the purchase of two new garbage trucks at $150,000 each, one new bulldozer at $240,000, three new riding lawn mowers at $16,000 each, and construction of an activity center in the part for $650,000. The expected lifetime of the various capital items is 10 years for the garbage trucks, 8 years for the bulldozer, 5 years for the lawn mowers, and 40 years for the activity center. Prepare a capital budget for the items to be acquired, showing their estimated lifetimes, and their per unit and total costs.
To prepare a capital budget for the items to be acquired, we need to list each item, its estimated lifetime, per unit cost, and total cost. Here is the breakdown:
1. Two new garbage trucks:
- Estimated lifetime: 10 years
- Per unit cost: $150,000
- Total cost: 2 * $150,000 = $300,000
2. One new bulldozer:
- Estimated lifetime: 8 years
- Per unit cost: $240,000
- Total cost: $240,000
3. Three new riding lawn mowers:
- Estimated lifetime: 5 years
- Per unit cost: $16,000
- Total cost: 3 * $16,000 = $48,000
4. Construction of an activity center:
- Estimated lifetime: 40 years
- Total cost: $650,000
Capital Budget for the acquisitions:
Item | Estimated Lifetime | Per Unit Cost | Total Cost
----------------------- | ------------------ | ------------- | ----------
Garbage trucks | 10 years | $150,000 | $300,000
Bulldozer | 8 years | $240,000 | $240,000
Riding lawn mowers | 5 years | $16,000 | $48,000
Activity center | 40 years | - | $650,000
Note: The activity center does not have a per unit cost as it is a one-time construction project.
To prepare a capital budget for the items to be acquired, we need to list the items, their estimated lifetimes, and their per unit and total costs. Let's create a table to organize the information:
| Item | Estimated Lifetime | Per Unit Cost | Total Cost |
|-------------------|--------------------|---------------|------------|
| Garbage Truck | 10 years | $150,000 | $300,000 |
| Bulldozer | 8 years | $240,000 | $240,000 |
| Riding Lawn Mower | 5 years | $16,000 | $48,000 |
| Activity Center | 40 years | $650,000 | $650,000 |
Now let's break down the calculations:
For the Garbage Trucks:
- Estimated Lifetime: 10 years
- Per Unit Cost: $150,000
- Total Cost: $150,000 * 2 Garbage Trucks = $300,000
For the Bulldozer:
- Estimated Lifetime: 8 years
- Per Unit Cost: $240,000
- Total Cost: $240,000 * 1 Bulldozer = $240,000
For the Riding Lawn Mowers:
- Estimated Lifetime: 5 years
- Per Unit Cost: $16,000
- Total Cost: $16,000 * 3 Riding Lawn Mowers = $48,000
For the Activity Center:
- Estimated Lifetime: 40 years
- Per Unit Cost: $650,000
- Total Cost: $650,000 * 1 Activity Center = $650,000
So, the capital budget for the items to be acquired is as follows:
| Item | Estimated Lifetime | Per Unit Cost | Total Cost |
|-------------------|--------------------|---------------|------------|
| Garbage Truck | 10 years | $150,000 | $300,000 |
| Bulldozer | 8 years | $240,000 | $240,000 |
| Riding Lawn Mower | 5 years | $16,000 | $48,000 |
| Activity Center | 40 years | $650,000 | $650,000 |
Please note that the table assumes one unit for each item except for the riding lawn mowers, which states three units.