A Paper Shredder Purchased by Value Choice Electronics Is Expected

question 50

Multiple Choice

A paper shredder purchased by Value Choice Electronics is expected to last 5 years. The purchase price was $3,943. Shipping costs were $150 and initial setup charges were $157. The trade-in value is $395. Prepare a depreciation schedule using the sum-of-the-year's method, then enter the accumulated depreciation at the end of year 4 as your answer.

• A) $2,997
• B) $649
• C) $257
• D) $3,598

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Definitions:

Average Fixed Cost

Production's unchanging charges, unaffected by output levels, divided by the total output quantity.

Average Variable Cost

The cost a company incurs to produce one additional unit of a product, calculated by dividing the total variable costs by the number of units produced.

Average Variable Cost

The cost per unit of variable inputs (like labor or materials) for producing a good, which changes with the level of output.

Fixed Cost

Costs that do not vary with the level of output or production, such as rent, salaries, or insurance.