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
someone told me the name of an employer. How can i find out if they actually work there?
Relevant to what? Depreciation is an accounting contrivance to diminish taxable income.
Depreciation for 1st year = 6000 Depreciation for 2nd year = 2000 Depreciation for 3rd year = 400
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)
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.
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.
ongoing repairs are not relevant, the other three are all essential...
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.
no its a product cost
What principles dictate that an asset's cost should be expensed over its useful life
32000-2000/5=31600
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.