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Are depreciation charges implicit cost

Updated: 10/24/2022
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10y ago

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yes, depreciation is an implicit cost. but this implicit cost is added to total costs in calculating accounting profits.

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10y ago
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Q: Are depreciation charges implicit cost
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Related questions

Could depreciation charges on company owned equipment constitute an implicit cost to a Manufacturing Company?

Yes, depreciation is considered a loss of money that was used to purchase an item, in this case equipment. The money being lost is an opportunity cost that could have been used to purchase something else, or the depreciating item itself (i.e. a new car that depreciates greatly when you drive it off the lot) can be considered an opportunity cost for buying something with less depriciation and a more efficient use of money (i.e. a used car)


Is depreciation a controllable cost?

No. Depreciation would be considered an uncontrollable cost because it is fixed


Is depreciation a product dost?

Depreciation is a period cost and not a product cost as depreciation is still charged even if there is no production or sale of goods.


Is depreciation an overhead cost?

no


Is the depriciation cost is direct cost?

Depreciation is an indirect cost as there is no separate identification in product cost that which cost is depreciation as deprecation is a overhead cost that’s why it is indirect cost.


1 Explicit cost and Implicit cost are the two dimensions of cost What role does cost play in financial decisions?

Explicit cost and Implicit cost are the two dimensions of cost What role does cost play in financial decisions?


How does depreciation affect the cost of capital?

Please refer to the following Web site for a complete explanation on how depreciation affects the cost of capital: http://en.wikipedia.org/wiki/Depreciation


What is the different between the cost of depreciation of a asset and its related accumulated depreciation?

Cost of depreciation assets and accumulated depreciation is same as accumulated depreciaton calculates how much depreciation is charged till date while remaining is current book value of assets.


Depreciation is called as notional cost why and explain?

Depreciation is called a notional cost because it cannot be measured in real terms.


Historical cost based depreciation tends to do what when there is inflation?

HIstorical cost based depreciation tends to increase profits when there is inflation


Is depreciation direct cost?

Only depreciation for all those fixed assets which directly involve in manufacturing of production volume is part of direct cost while all other depreciation is not part of direct cost and included in indirect cost classification.


Is depreciation on a machine a period cost or product cost?

product cost