According to Property Life Cycle Theory, the Two Components of Property

question 13

Multiple Choice

According to Property Life Cycle Theory, the two components of property value are:

• A) Structure value plus land value.
• B) Structure value plus agricultural opportunity value.
• C) Construction cost plus land value.
• D) Construction cost plus agricultural opportunity value.

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Definitions:

Fixed Component

A cost that remains unchanged in total regardless of changes in the level of activity or output over a certain period.

Overapplied

This refers to the condition in which the allocated costs in an accounting system exceed the actual costs incurred, often in the context of overhead or indirect costs in manufacturing.

Variable Component

Part of a cost or expense that changes in proportion with the level of activity or volume of output.

Fixed Component

A portion of a cost that does not change with the level of production or sales over the short term.