Expected Sales for Next Year for the Brady Division Are

question 14

Multiple Choice

Expected sales for next year for the Brady Division are 120,000 units.Drew Carey, the manager of the Brady Division, is under pressure to improve the performance of the Division.As he plans for next year, he has to decide whether to produce 120,000 units or 140,000 units.The Brady Division will have higher net income, if Drew Carey decides to

• A)produce 140,000 units if income is measured under absorption costing.
• B)produce 140,000 units if income is measured under variable costing.
• C)produce 120,000 units if income is measured under absorption costing.
• D)produce 120,000 units if income is measured under variable costing.

Understand and calculate depreciation expenses using different depreciation methods (inventory system, straight-line, sum-of-the-years'-digits, double-declining-balance).

Explain the rationale behind selecting certain depreciation methods and their impact on financial statements.

Compute the depreciation expense of assets bought at different times within a year using various conventions (nearest whole month, nearest whole year, half-year).

Discuss the impact of repair and maintenance costs on the selection of depreciation methods.