The Expense Created by Allocating the Cost of Plant and Equipment

question 53

Multiple Choice

The expense created by allocating the cost of plant and equipment to the periods in which they are used, representing the expense of using the assets, is called:

• A)The cash basis of accounting.
• B)Allowance for depreciation.
• C)Accumulated depreciation.
• D)Depreciation.
• E)The matching principle.

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Definitions:

Marginal Costs

The upsurge in complete costs linked to the production of a supplementary unit of a good or service.

Average Variable Costs

The total variable costs of production divided by the quantity of output produced, representing the variable cost per unit of output.

Marginal Cost

The increase or decrease in the total cost that arises when the quantity produced is incremented by one unit.

Average Variable Cost

is the cost that varies with the level of output, calculated by dividing the total variable costs by the quantity of output produced.