A Truck Costs $8,000 with a Residual Value of $1,000

question 67

Multiple Choice

A truck costs $8,000 with a residual value of $1,000. The truck is expected to have a useful life of 70,000 miles. Assuming the truck is driven 15,000 miles the first year, the depreciation expense would be:

• A)$1,714
• B)$1,500
• C)$1,174
• D)$1,505
• E)None of these

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Definitions:

Product Costs

Product costs are the costs directly attributed to the creation of a product, including materials, labor, and overhead.

Direct Materials

Raw materials that can be directly identified with the production of specific goods or services.

Merchandising Companies

Enterprises engaged in the business of buying merchandise from manufacturers and selling it to customers, typically involving retail or wholesale operations.

Manufacturing Companies

Businesses that produce goods from raw materials through the use of manual labor or machinery, often involving assembly processes.