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Depreciation is a sunk cost, so you should ignore it in relevatnt costing. you shoud be asking yourself the following question: can I avoid depreciations once I have bought the asset? You should always ignore deprecition when answering a relevant costing questions. You have already incurred the cost of the asset and as a result you can not avoid deprecition, that is why it is a sunk cost. Peace
Tshepo
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∙ 16y ago
Khalil Khan
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How do you treat resale value in relevant costing?
someone told me the name of an employer. How can i find out if they actually work there?
Is depreciation a relevant cost?
Relevant to what? Depreciation is an accounting contrivance to diminish taxable income.
What is the amount of depreciation using the double declinging method for the second year of use for equipment costing 9000 with an estimated residual value of 600 and as estimated life of three year?
Depreciation for 1st year = 6000 Depreciation for 2nd year = 2000 Depreciation for 3rd year = 400
Definition of full costing method?
a.k.a. Absorption Costing, is a method that includes direct manufacturing costs as well as indirect manufacturing costs such as machine depreciation and factory. (GAAP Required)
What is provision for depreciation and how do you treat it in accounts?
A provision of depreciation account is different than other accounts because it collects all of the value of depreciation within the account. In the main asset account, depreciation is not credited because it is credited into this account.
How is relevant costing useful in determining the good business decision making?
Relevant costing is important to good business decision making because it allows a company to price their goods and services for maximum sales. Without the ability to make sales, no business will survive.
Which of the items are not a relevant factor in computing depreciation a salvage value or useful life or cost or ongoing repairs?
ongoing repairs are not relevant, the other three are all essential...
Is depreciation cost relevant in Outsourcing?
Only the total amount of a new machine is a relevant cost because this incurs in the future and incurs when a certain decision is made. The depreciation of old machines is a sunk cost so this is an unavoidable cost. The amount for the old machine you sell is a relevant cost because you will get this amount if you sell the old machine and buy the new one.
Does absorption costing treat fixed manufacturing overhead as a period cost?
no its a product cost
What does the relevant factor in computing depreciation include?
What principles dictate that an asset's cost should be expensed over its useful life
If a truck costing 32000 has a useful life of 5 years and a value of 2000 the declining-balance method annual depreciation would be?
32000-2000/5=31600
Criticisms of absorption costing?
Full costing information is perceived by some critics as not very useful, because it can be backward-looking: example- it includes information irrelevant to decision making, but excludes some relevant information.
