Practice Maximum Profit Method Analysis (3) - Depreciation Calculation

Practice: Maximum Profit Method Analysis

Lesson 3Depreciation Calculation

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9 questions

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Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
What is the first year's depreciation for a machine valued at 28 lakh with a depreciation rate of 40%?
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Use the formula: Depreciation = Rate × Book Value.
Question 2.
How do you calculate the cumulative profit?
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Consider previous annual profits to find the total.
3Question 3.
What is the first step in calculating annual costs for a loader?
- Calculate depreciation
- Add annual revenue
- Determine maintenance costs
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Think about the costs involved in asset management.
4Question 4.
True or False: The economic life of a machine is the point at which its profit begins to decline.
- True
- False
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Consider what happens over time with machine performance.
Question 5.
A factory has an old loader with an annual cost of 20 lakh and a revenue of 25 lakh for three consecutive years. If the new loader can generate a revenue of 30 lakh yearly, should the factory replace its old loader immediately?
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Compare projected profits over the next few years for each option.
Question 6.
The current loader's average cumulative profit has plateaued. If its maximum profit is 5 lakh per year, but the proposed loader could generate 8 lakh per year, should it be replaced immediately?
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Consider future financial benefits in making the decision.

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