Question

For income statement purposes, depreciation is a variable expense if the depreciation method used is

a. units-of-production.
b. straight-line.
c. sum-of-the-years'-digits.
d. declining-balance

Answer 1

Depreciation is a variable expense when the units-of-production method is used, as it varies with production level.

d. declining-balance

Step-by-step explanation:

For income statement purposes, depreciation is considered a variable expense when the depreciation method used is based on the units-of-production. This method allocates a variable amount of depreciation each period based on the actual usage or production level of the asset. Methods like the straight-line, sum-of-the-years'-digits, and declining-balance are based on time rather than production levels, so they result in a fixed charge each period and are therefore considered fixed expenses.