Answer:
Depreciation of truck if it delivers 30,000 cubic yard of concrete in one year 200,000 / 100,000 * 30,000 = $60,000
Cost of raw material for 2,000 cubic yard (2,000 * $25 )= $50,000
Explanation:
Depreciation is allocation of an assets cost over its useful life. Depreciation expense is considered as a tax shield. The larger the depreciation expense, the lower will be the taxable income. Smith Concrete company uses concrete material as a base for truck depreciation. Truck depreciation cost is fixed cost. The raw material cost of concrete is variable.
