Polaris Industries Is Forecasting Its Financial Statements for Year 6

question 29

Multiple Choice

Polaris Industries is forecasting its financial statements for Year 6. Selected financial information for Year 5 is provided in the table. In Year 6 Polaris Industries is planning to invest $50 million in CAPEX. The average depreciation rate is 12%. What is the forecasted depreciation expense in Year 6? Selected Financial Information
Polaris Industries Inc. ($000s)
$$\begin{array} { | c | c | } \hline & \text { Year 5 } \\\hline \text { PP\&E } & 222,336 \\\hline \text { Depreciation } & 28,632 \\\hline \text { CAPEX } & 30,000 \\\hline\end{array}$$

• A)$26,844
• B)$26,824
• C)$30,280
• D)$31,624
• E)$32,680

---

Definitions:

Own Allocation Base

Refers to the specific denominator that a company chooses to allocate indirect costs to different cost objects, based on their usage or benefit from those costs.

Plantwide Overhead Rate

A single overhead absorption rate used throughout a manufacturing facility to allocate overhead costs to products.

Volume-Based Measures

Metrics that quantify outcomes or activities based on the amount or volume of production, sales, or other business operations.

Activity Rate

A ratio used to allocate costs to products or services based on the activities that are required to produce them.