Which of the Following Depreciation Methods Allocates a Fixed Amount

question 46

Multiple Choice

Which of the following depreciation methods allocates a fixed amount of depreciation to miles driven,hours used,or some other measure of the asset's utilization?

• A) Straight-line
• B) Declining-balance
• C) Units-of-production
• D) Double-declining-balance

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Definitions:

Cost Equation

A formula used to predict the total costs of production, based on fixed and variable costs, as a function of activity levels.

Contribution Margin

The selling price per unit minus the variable cost per unit, which helps determine how much sales contribute to covering fixed costs and generating profit.

Variable Costs

These are costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Fixed Costs

Costs that do not change with the level of goods or services produced within a certain range; such costs are incurred regardless of business activity levels.