Carleton Service Center just purchased an automobile hoist for $14,803. The hoist has a 5-year life and an estimated salvage value of $1,394. Installation costs were $2,841, and freight charges were $852. Carleton uses straight-line depreciation.
The new hoist will be used to replace mufflers and tires on automobiles. Carleton estimates that the new hoist will enable his mechanics to replace 5 extra mufflers per week. Each muffler sells for $76 installed. The cost of a muffler is $35, and the labor cost to install a muffler is $14.