Hans Purchased a New Passenger Automobile on August 17, 2018

question 15

Multiple Choice

Hans purchased a new passenger automobile on August 17, 2018, for $30,000. During the year the car was used 40% for business and 60% for personal use. Determine his cost recovery deduction for the car for 2018.

• A) $500
• B) $1,000
• C) $1,200
• D) $1,333
• E) None of the above

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Definitions:

Budget Variance

A measurement of the difference between the budgeted or planned amount of expense or revenue, and the actual amount incurred/sold.

Predetermined Overhead Rate

An estimated charge used to distribute overhead costs to products or projects, based on an expected standard, allowing for cost allocation before actual expenses are known.

Variable Component

The portion of costs or expenses that varies directly with changes in production volume or business activity.

Fixed Component

The portion of a cost or expense that remains constant regardless of the level of production or business activity.