For frank’s funky sounds. straight-line depreciation on the trucks is a


For Franks Funky Sounds, straight-line depreciation on the trucks is a O A. fixed cost O B. variable cost O C. high-low cost

Answer

A) Fixed cost is the correct alternative.

Explanation : Formula for annual Depreciation expense under straight line method = [ Cost of the asset + Installation charges - Scrap value ] / Number of years of working life. It is always remain fixed and never altered with the changes in the number of units produced or sold. So, it is a fixed cost in nature .

Why the other alternatives are not true :

B) Variable cost changes when there is an changes in the units of production or sales. But depreciation expense under straight line method never altered.

C) High low cost is only exists when in a total cost pool, both variable and fixed cost components are available. But depreciation expense is a fixed cost.

D) Mixed cost means semi variable cost. Where the the expenses contains fixed and variable cost components. As we know depreciation expense is a pure fixed cost which never depends on number of units produced or sold, thus it is not a mixed cost .

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