On June 1,2011,James Places in Service a New Automobile That

question 88

Multiple Choice

On June 1,2011,James places in service a new automobile that cost $40,000.The car is used 60% for business and 40% for personal use.(Assume this percentage is maintained for the life of the car.) James does elect not to take additional first-year depreciation.Determine the cost recovery deduction for 2011.

• A) $1,776.
• B) $1,836.
• C) $6,576.
• D) $8,000.
• E) None of the above.

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Definitions:

Applied Overhead

This is the process of assigning estimated overhead costs to specific cost objects based on a predetermined rate or basis such as labor hours or machine hours.

Underapplied Overhead

A situation where the actual manufacturing overhead costs are higher than the overhead costs allocated to products.

Credit Side

The right side of an accounting ledger where increases in liabilities, revenues, and equity accounts are recorded.

Short Term Profitability

The ability of a company to generate profit over a brief period, often evaluated on a quarterly or annual basis.