The Calculation for Annual Depreciation Using the Straight-Line Depreciation Method

question 60

Multiple Choice

The calculation for annual depreciation using the straight-line depreciation method is

• A) Initial Cost/Estimated Useful Life
• B) Depreciable Cost/Estimated Useful Life
• C) Depreciable Cost × Estimated Useful Life
• D) Initial Cost × Estimated Useful Life

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Definitions:

Fixed Cost

Expenses that do not change with the volume of production or business activity, such as rent, salaries, and insurance premiums.

Production Increases

A rise in the amount or level of output that a production system generates over a specific period.

High-low Method

A cost accounting technique used to estimate variable and fixed costs based on the highest and lowest levels of activity within a given period.

Variable Cost

Costs that vary directly with the level of production or sales volume. They include raw materials, labor directly involved in production, and sales commissions.