Machinery Is Purchased for $140 000

question 36

Multiple Choice

Machinery is purchased for $140 000.It is estimated that it has a useful life of 5 years and a residual value of $20 000.Using the straight-line method,calculate the amount of annual depreciation to be charged.

• A) $12 000
• B) $24 000
• C) $28 000
• D) $14 000

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Definitions:

Departmental Predetermined Overhead Rates

Rates used to allocate overhead costs to products, calculated in advance for each department based on estimated overheads and activity levels.

Machine-Hours

An index of manufacturing productivity determined by the total hours of machine operation.

Machine-Hours

A measure of production time, indicating how many hours machines are used in the manufacturing process.

Direct Labor-Hours

The total time workers spend producing a product or service, directly associated with the specific work on the product.