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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.
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Is depreciation a relevant cost?
Relevant to what? Depreciation is an accounting contrivance to diminish taxable income.
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...
What does the relevant factor in computing depreciation include?
What principles dictate that an asset's cost should be expensed over its useful life
How do you treat depreciation in relevant costing?
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
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 of sales office equipment a selling expense?
The Sales Office is in charge of the selling of valuables of an entity. Thus, all expenses related to this office is debited to selling expenses. Furthermore, depreciation is a form of expense, and deserves a different account, but since it is related to the sales office, it is debited to selling expenses. Yes, it is a selling expense.
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.
Is depreciation an overhead cost?
no
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.
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
Are depreciation charges implicit cost?
yes, depreciation is an implicit cost. but this implicit cost is added to total costs in calculating accounting profits.
