How Is the Depreciation Expense Calculated Using the Productive Output

question 16

Multiple Choice

How is the depreciation expense calculated using the productive output method?

• A) Depreciation expense = (Depreciable amount/Life expressed in units of output)× Units of output for period
• B) Depreciation expense = Depreciable amount/Units of output for period
• C) Depreciation expense = Depreciable amount × Units of output for period
• D) Depreciation expense = Depreciable amount/Life expressed in units of output

---

Definitions:

Direct Materials Budget

A financial plan that estimates the raw materials required for production and the cost of these materials for a specific period.

Ending Direct Materials Units

The quantity of direct materials still on hand at the end of a production period.

Cash Budget

A financial plan that projects cash inflows and outflows over a specific period, helping businesses manage their liquidity.

Cash Deficiency

A situation where a business or individual has insufficient cash to cover expenses or liabilities.