Which of the Following Must Be Considered in Estimating Depreciation

question 68

Multiple Choice

Which of the following must be considered in estimating depreciation on an asset for an accounting period?

• A) only the original cost of the asset
• B) only the asset's useful life
• C) both the original cost of the asset and its useful life
• D) the decline in its fair market value

Identify and calculate variances related to direct labor rate and efficiency.

Understand the components and calculations of variable overhead and fixed overhead variances.

Apply standard costing methods to compute variances in manufacturing contexts.

Analyze controllable variances, volume variances, and their implications on cost control.

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Definitions:

Capital Rationing

The process of selecting the most profitable projects to invest in when funds are limited.

Capital Budgeting

Capital budgeting involves the process of deciding which long-term investments or projects a company should undertake, based on potential profitability and risk.

Cost of Capital

The minimum earnings rate required by a company on its investment endeavors to maintain market valuation and attract funding.

Budgetary Limit

The maximum amount of money allocated for a specific purpose in a budget.