Fabian Woodworks ​

question 96

Multiple Choice

Fabian Woodworks
​
This company purchased a truck at a cost of $12,000. The truck has an estimated residual value of $2,000 and an estimated life of 5 years, or 100,000 hours of operation. The truck was purchased on January 1, 2019, and was used 27,000 hours in 2019 and 26,000 hours in 2020.
-Refer to Fabian Woodworks. What amount will be reported as depreciation expense over the 5-year life of the equipment?

• A)$12,000
• B)$ 8,000
• C)$10,000
• D)$ 4,000

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Definitions:

Average Total Cost

The cost per unit of output, calculated by dividing the total production cost by the quantity of units produced.

Basketballs

Inflated balls used in the game of basketball, designed according to specific regulations in terms of size and weight.

MC

The additional cost of producing one more unit of a product or service.

TVC

Total Variable Cost, which refers to the total of all costs that vary with output level in the short term.