The Ancira Co

question 83

Multiple Choice

The Ancira Co.acquired a machine on May 1, 2010, at a cost of $60, 000.The machine is expected to have a ten-year life and a residual value of $5, 000.The estimated lifetime output from the machine is expected to be 55, 000 units.Under which of the following depreciation methods would the depreciation charge be the greatest in 2010 if 9, 100 units were produced during the year?

• A)activity (units-of-output)method
• B)straight-line method
• C)sum-of-the-years'-digits method
• D)double-declining-balance method

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Definitions:

Net Operating Income

Net Operating Income (NOI) is a measure of a company's profitability from its core business operations, excluding expenses and revenues from financing and investing activities.

Absorption Costing

Absorption costing is an accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.

Net Operating Income

A measure of a company's profitability from its core business operations, excluding deductions of interest and taxes.

Absorption Costing

A costing method that includes all manufacturing costs - both fixed and variable - in the cost of a product.