On January 1, 2016, Grove City Corp

question 110

Multiple Choice

On January 1, 2016, Grove City Corp.purchased a ship for $2,000,000.It has a ten-year useful life and a residual value of $50,000.The company uses the double-declining-balance method.
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-What was the depreciation expense for Grove City Corp.for the year ended December 31, 2016?

• A) $ -0-
• B) $195,000
• C) $390,000
• D) $400,000

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Definitions:

Variable Cost

Costs that change in proportion to the level of production or sales activity, such as raw materials and direct labor costs.

Fixed Costs

Fixed overheads that stay the same no matter how much is produced or sold, including rental fees or staff salaries.

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the amount by which sales can drop before a business incurs a loss.

Break-even Point

The level of sales at which total revenues equal total costs, and the business makes no profit but also incurs no loss.