Question

Depreciation on the office equipment would appear in which of the following budgets?

A. Production budget.
B. Manufacturing overhead budget.
C. Operating expense budget.
D. Cash budget.

Answer 1

Depreciation on office equipment appears in the operating expense budget as it is a fixed cost and non-cash expense that does not vary with production levels.

Step-by-step explanation:

The depreciation on office equipment would appear in the operating expense budget. Depreciation is the allocation of the cost of a fixed asset, such as office equipment, over its useful life. This type of cost is a non-cash expense and is considered a fixed cost, as it does not change with the level of production or business activity. Fixed costs, like depreciation, would not fall under the production budget, which relates to the direct costs of producing goods, nor the manufacturing overhead budget, which involves costs associated with the manufacturing process. Finally, it would not be in the cash budget since depreciation is a non-cash transaction.