If an Automobile Manufacturer Changes from Skilled Labor to Computer-Controlled

question 23

Multiple Choice

If an automobile manufacturer changes from skilled labor to computer-controlled assembly procedures, the past data

• A) are useful in predicting future costs.
• B) are of little or no value in predicting future costs.
• C) should be used without adjustments to predict future costs.
• D) are representative of future costs.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use, reducing its book value on the balance sheet.

Historical Cost

The original monetary value of an asset or investment, as recorded on the financial statements at the time of purchase or acquisition.

Declining-Balance Depreciation

A method of accelerated depreciation where an asset loses value by a fixed rate, resulting in larger depreciation charges in the earlier years and smaller charges in the later years.