Bloomfield's Has Some Idle Equipment That Is Debt-Free and Also

question 42

Multiple Choice

Bloomfield's has some idle equipment that is debt-free and also fully depreciated.If the company decides to use this equipment for a new project,what cost,if any,should be included for this equipment in the project's start-up costs?

• A)Zero cost
• B)Original purchase price of the equipment
• C)Original purchase price minus any tax savings realized to date on the depreciation
• D)Current market value of the equipment
• E)Annual storage cost for the equipment

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Definitions:

Performance Reports

Documents that compare actual work performance against planned or expected outcomes.

Variable Cost

A cost that varies, in total, in direct proportion to changes in the level of activity. A variable cost is constant per unit.

Fixed Cost

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.

Planning Budget

A financial plan for a future period, outlining an organization's revenue and expenditures.