yes, depreciation is an implicit cost. but this implicit cost is added to total costs in calculating accounting profits.
the opportunity cost or value of the best by a business
yes..depreciation cost is the variable cost..
First of all, we need to understand what is explicit cost and implicit cost. Explicit cost mean real expenses, while implicit cost mean opportunity cost. In accounting profit, we only minus explicit cost, while in economic profit we minus explicit cost and implicit cost. therefore accounting profit is higher than economic profit.
Because opportunity cost doesn't show up as an accounting expense.
Yes, depreciation is considered a sunk cost in financial analysis. Sunk costs are costs that have already been incurred and cannot be recovered, so they are not relevant for future decision-making. Depreciation is a non-cash expense that reflects the decrease in value of an asset over time, and it is treated as a sunk cost in financial analysis.
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)
No. Depreciation would be considered an uncontrollable cost because it is fixed
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.
Explicit cost and Implicit cost are the two dimensions of cost What role does cost play in financial decisions?
no
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.
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
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 a notional cost because it cannot be measured in real terms.
HIstorical cost based depreciation tends to increase profits when there is inflation
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.
the opportunity cost or value of the best by a business