Iverson Company Purchased a Delivery Truck for $45,000 on January

question 46

Essay

Iverson Company purchased a delivery truck for $45,000 on January 1, 2021.The truck was assigned an estimated useful life of 100,000 miles and has a residual value of $10,000.The truck was driven 18,000 miles in 2021 and 22,000 miles in 2022.Compute depreciation expense using the units-of-activity method for the years 2021 and 2022.

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Definitions:

SQ × AP

The standard quantity times actual price formula, used in cost accounting to calculate the variance between the actual cost and the standard cost of raw materials.

Direct Materials Price Variance

The difference between the actual cost and the standard cost of direct materials used in production, indicating how effectively the materials budget is being adhered to.

Per-Unit Standards

Estimates of the direct materials, direct labor, and manufacturing overhead costs required to produce one unit of a product.

Direct Labor Price Variance

The difference between the actual cost of direct labor and the expected (or standard) cost of direct labor used during production.