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Sophie [7]
3 years ago
8

Leaping Deer Company purchased a tractor at a cost of $240,000. The tractor has an estimated residual value of $40,000 and an es

timated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2015 and was used 2,400 hours in 2015 and 2,200 hours in 2016. What method of depreciation will produce the maximum depreciation expense in 2016
Business
1 answer:
trapecia [35]3 years ago
3 0

Answer:

Units of production method: $76,820

Explanation:

The three most common depreciation methods are: straight line, double-declining, and units of production. We will calculate the depreciation expense for each.

Straight line method:

Depreciable amount= cost - residual value

                                 = 240,000 - 40,000

                                = 200,000

Depreciation by year = depreciable amount / years of useful life

                                   = 200,000 / 8

                                   = 25,000

Double declining method

Depreciation per year = depreciable amount x (2 / useful life in years)

                      = 200,000 x (2 / 8)

                      = 50,000

Units of production method

Depreciation per unit  = depreciable amount / hours of operation

                                     = 200,000 / 12,000

                                     = 16.7

Total depreciation = depreciation per unit x actual units of operation

                              = 16.7 x 2,400 + 2,200

                              = 16.7 x 4,600

                              = 76.820

Therefore, the units of production method results in the highest depreciation expense among the three.

   

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Answer:

Factors to consider:

1. Specialisation role

2. Complexity of sales process

3.Tenure

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5. Sales Representative leadership

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7. Internal Bureaucracy

8. Value add of managers

Factors not to consider;

1. Market share

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3. Distribution process

4. Personal affiliation, race or religion

Explanation:

When considering a company's span of control, which simply means the number of junior staff a manager should manage, it is important to note factors relating to geographical coverage, a wide coverage can create difficulties in supervision to a manager. Consequently reducing the span of control.

Specialisation also help in ensuring the manager is an expert in the area he or she supervise. Experienced manager with good understanding of the tasks, good knowledge of the workers and good relationships with the workers, will be able to supervise more workers

The complexity of a sale process can affect a manager's supervision performance. if the sale process for example require an online payment to a final user who may not be physically available. Supervising such sales requires adequate training.

Other factors like; Tenure, Sales Representative leadership, Support network, Internal Bureaucracy, Value add of managers are paramount in determining span of control. However, market share, production process, distribution process and personal affiliation, race and religion should not affect the span of control.

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3 years ago
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Answer:

(i) The farm can cover its revenue using its total variable cost, therefore the farm will continue producing 200 units

(ii)  The farm cannot cover its revenue using its total variable cost, therefore the farm will shut down

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(i)According to given data,  When output is 200 but price is $20, this price is equal to ATC, so the farm breaks even. But since this price is higher than AVC of $15, the farm can cover its revenue using its total variable cost, therefore the farm will continue producing 200 units.

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