A Company Purchased a Computer on July 1,2019 for $50,000

question 25

Multiple Choice

A company purchased a computer on July 1,2019 for $50,000.The estimated useful life of the computer was five years,and it has no residual value.Which of the following methods should be used to best match its expense against the revenue it produces?

• A) the units-of-production method
• B) the straight-line method
• C) the double-declining-balance method
• D) the first-in, first-out method

---

Definitions:

Fixed Manufacturing Expenses

Fixed manufacturing expenses are overhead costs that do not change with the level of production output, such as rent for a factory building.

Fixed Selling

Costs associated with selling products that remain constant regardless of the level of production or sales, such as salaries of sales personnel and rent of the sales office.

Financial Advantage

The benefit gained in financial terms that gives an individual or business a superior position relative to competitors.

Traceable Fixed Costs

Fixed costs that can be directly associated with a specific business segment or area.