Question

Consider a service company that provides carpet cleaning and uses straight-line depreciation. Classify the cost of the depreciation on the carpet cleaning machines.

a. Fixed
b. Indirect

Answer 1

Both :

a. Fixed and,

b. Indirect

Step-by-step explanation:

The depreciation expense on production machinery form part of the product or service cost.

The cost however, can not be traced to the product or service that is why it is an Indirect cost as opposed to the direct costs which can be traced directly on the product or service.

Straight line method charges a fixed amount of depreciation thus the depreciation is a fixed charge.