A Machine Was Purchased for $35,500, Having a Useful Life

question 46

Multiple Choice

A machine was purchased for $35,500, having a useful life of 10 years, and a residual value of $6,000.Compute the annual depreciation expense using the straight-line method.

• A) $3,550
• B) $4,150
• C) $5,800
• D) $2,950

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Definitions:

Return On Investment

A measure used to evaluate the efficiency or profitability of an investment compared to its initial cost.

Cost-Plus Pricing

A pricing approach that involves adding a consistent percentage or fixed sum to the production cost of a product or service to set its sale price.

Absorption Cost

A costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Return On Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the profit from an investment by the cost of the investment.