Schager Company Purchased a Computer System on January 1, 2014

question 35

Multiple Choice

Schager Company purchased a computer system on January 1, 2014, at a cash cost of $25,000. The estimated useful life is 10 years, and the estimated residual value is $3,000. The company will use the double declining-balance depreciation method. How much is the 2015 depreciation expense?

• A) $5,000.
• B) $4,120.
• C)$4,000.
• D)$3,520.

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Definitions:

Fixed Cost

Costs that do not change in total regardless of the level of output or activity in the short term.

Average Fixed Cost

The fixed costs of production (costs that do not change with the level of output) divided by the quantity of output produced.

Variable Cost

Costs that change in proportion to the level of activity or volume of production in a business.

Total Cost

Total cost refers to the aggregate sum of all costs, both fixed and variable, incurred by a business in producing goods or services.