Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Fixed Costs: Depreciation Expenses, Maintenance and Repairs, Amortization, Insurance, and Taxes - Case Study Example

Comments (0) Cite this document
Suppose Claire's Antique assets include Antique Furniture for office setup, the Antique car for the transportation purpose as well as the antique computer and telephone for office use. The types of fixed cost that Claire's antique would probably incur are the Depreciation expense, maintenance and repairs, Amortization, Insurance and Taxes…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER93.4% of users find it useful
Fixed Costs: Depreciation Expenses, Maintenance and Repairs, Amortization, Insurance, and Taxes
Read TextPreview

Extract of sample "Fixed Costs: Depreciation Expenses, Maintenance and Repairs, Amortization, Insurance, and Taxes"

ACC PH 2 DB Suppose Claire's Antique assets include Antique Furniture for office setup, the Antique car for the transportation purpose as well as theantique computer and telephone for office use. The types of fixed cost that Claire's antique would probably incur are the Depreciation expense, maintenance and repairs, Amortization, Insurance and Taxes. These are some of the major fixed cost that will incur while using of these antique assets.
Depreciation Expenses: These are the expenses which incur while using of the fixed assets and we have to allocate a balanced amount of money in each term so that our asset cost is spread over a number of terms or period. (Meigs & Meigs, 1997)
Maintenance and Repairs Expenses: While using these Antique assets we will probably incur these costs as we will have to keep in running the assets and therefore we will need to repair them accordingly as well as make some necessary investment on that asset to maintain it. (Meigs & Meigs, 1997)
Insurance and Taxes: Whether they are new or Antique assets every assets has to be taxed and if we are using these assets for example the antique car we are using we have to pay the insurance on that so that are also considered as fixed cost which will probably incur. Taxes on antique items are a little bit lower as compared to new assets and the charges of insurance that is the Interest rate will probably be lower but the chances of running that assets are lower because risk is high and it can lead towards ineffective productivity. (Meigs & Meigs, 1997)
In my opinion it is not a good idea to uses Claire's assets to convert our fixed cost into variable cost as there are many fixed cost that are not convertible very easily in Claire's antique assets. The reason for not following this strategy is that no business can run without having a certain amount of fixed cost and there are many costs in those assets which can increase our expenses. The other thing about not using these Antiques is that they involve a high risk level which can ultimately affect our effectiveness and efficiency so therefore the use of these assets can be a high risk. Using of these assets might be useful in the short term but it cannot be favorable in the long term and if it could be convertible into variable cost then ultimately our cost of production will increase and our cost per unit will eventually go high. (Hermanson & Edwards, 1992)
This can be a good idea when we use these assets after their completion of their terms or after we depreciate our assets as according to their expected life when the salvage becomes zero or the expected life will become to an end by which we depreciated our assets. After that we will not be charged taxes and insurance on our assets and that would be the best time to use the assets or consider them as variable cost. As a smart manager I will always try to make my company's assets most productive which can lead to effective results and higher profits and that's why I used this technique to make our profits go higher and higher. (Warren, et al., 2001)
1. Warren, Carl S. Warren, Reeve, James M. Reeve, Philip E. Fess (2001) Accounting, Thomson South-Western.
2. Robert F. Meigs, Mary Meigs, Mark Bettner, Ray Whittington. (1997), Financial Accounting, McGraw-Hill Higher Education.
3. Hermanson and Edwards. (1992), Accounting Principles, Freeload Press, Inc. Read More
Cite this document
  • APA
  • MLA
(“Fixed Costs: Depreciation Expenses, Maintenance and Repairs, Case Study”, n.d.)
Fixed Costs: Depreciation Expenses, Maintenance and Repairs, Case Study. Retrieved from
(Fixed Costs: Depreciation Expenses, Maintenance and Repairs, Case Study)
Fixed Costs: Depreciation Expenses, Maintenance and Repairs, Case Study.
“Fixed Costs: Depreciation Expenses, Maintenance and Repairs, Case Study”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Fixed Costs: Depreciation Expenses, Maintenance and Repairs, Amortization, Insurance, and Taxes

How does depreciation accounting help the firm manage equipment investment costs and taxes

...?Running Head: CURRENT LIABILITIES The expression Current Liabilities describes those obligations that any given company has and that it expects to cover using the available Current Assets. These Current Liabilities can also be met by the creation of other Current Obligations with an annum or the business’ normal operating cycle depending upon which of them is longer. Some Current Liabilities maybe with the inclusion of Advance Incomes, Outstanding Expenses, and short-term creditors among others. (Nikolai et al, 2009 p139) This is a study set out to handle this issue of Current Liabilities in detail. More specifically, the study will seek to answer the thesis question, “How are Current Liabilities of known amounts, Current Liabilities...
4 Pages(1000 words)Essay

Allocation of Fixed Costs

...? Allocation of Fixed Costs Allocation of Fixed Costs Process of Allocation of IT costs In recent technological environment,the use of information technology has captured a major area in all fields of life. People are adopting up to date IT techniques for maintain their business in efficient manner. All small, medium and large companies run their business function with the help of information technology rather than using traditional techniques. From the perspective of cost accounting, all the indirect costs and overheads were absorbed in direct costs using absorption costing methodology in traditional costing system. But in recent environment where the overheads such as IT cost became a major portion in product cost. In advanced...
3 Pages(750 words)Essay

Health Insurance Costs Versus Privacy

...? Topic:  Health Insurance Costs Versus Privacy Section 60 of the Equality Act prohibits Computers by Design (CBD) from asking about the health of job candidates or assessing their fitness before making a job offer, unless where an exception applies. CBD can make conditional job offers upon satisfactory health check-ups. Upon job confirmation, they may pose health related questions and require employees to undergo medical checks. If information obtained reveals a condition that would affect an individual's ability to perform their duties, CBD would consider reasonable adjustments that may assist the employee. If such adjustments cannot be accommodated, CBD may revoke the job offer. This, however, should always be an absolute last resort...
3 Pages(750 words)Essay

Gulfstream G650 Maintenance: Control of maintenance expenses

...? Gulfstream G650 Maintenance: Control of Maintenance Expenses of the The importance of maintenance activities in the aviation industry cannot be denied. The significance is more because airline is one of the transportation mediums and thus the requirement of safety and security is very high. Studies have shown that nearly 10.1% of the overall operation of a company is related to the maintenance task. This clearly reflects the commitment of aviation companies in maintaining safety. However, the recent global credit crunch has resulted in failing demands and low profit margins. In such situation, aviation is left with the sole option of controlling the cost of maintenance. The other major costs such as fuel cost remains beyond...
15 Pages(3750 words)Research Paper

Fixed and Variable Costs

...Week 3 DQ's Fixed cost is that cost that does not change significantly with the change in the level of activity. Examples of fixed cost include interest expense, salaries and expenses of the employees or executives, property taxes and insurance protection. Variable cost is that cost that cost which changes with the change in the level of activity. For example if the company is producing more aero planes then more amount of raw material will be required to make the planes (Leslie 1993). Examples of variable cost include raw material, labor cost. There are some costs which include both the fixed and variable element in it and are referred to as semi variable costs. Examples of semi variable costs include electricity expense, telephone...
2 Pages(500 words)Essay

Variable and Fixed Costs

...Variable and Fixed Costs Part I Financial accounting mainly focuses on financial ments that distributed to financial analysis, lenders, stakeholders and others that are outside the company. On the other hand, financial accounting courses covers general principles of accounting that are generally acceptable. These are principles that must be followed in reporting a corporations’ past transaction results on its income statement, balance sheet, cash flows’ statement, and statements showing changes in the equity of shareholders. On the other hand, managerial accounting focuses on providing information that is essential and is found within the company so that the management of the company can use that information to effectively operate...
2 Pages(500 words)Admission/Application Essay

Allocation of Fixed Costs

...Allocation of Fixed Costs Part I: Activity based management and activity based costing (ABC) benefits in an organization The main differentiation point that makes ABC unique from other allocation methods is its focus on minimization of waste and idle capacity in the production processes. Activities within the production process to which indirect costs can directly be attributed to production are identified for estimations and allocation. The entire activity costing enables the management to single out cost element on each product using activity costing product costing computation. This is a purely accounting technique from which management decision making insights can be developed. Decision making from such information is the specialty...
2 Pages(500 words)Admission/Application Essay

Variable and Fixed Costs

...Contribution Margin Income ment Following is the contribution income ment of Herrested Company for the year ending December 31, In this income statement, all the variable costs are first deducted from total sales to get a contribution margin figure. After that, all the fixed expenses are then deducted from contribution margin figure to reach at the net income figure. In year 2011, Herrested Company earned contribution margin of $60 per unit or $480,000 in total with the net income of $180,000. Herrested Company Contribution Margin Income Statement For the period ending December 31, 2011           per unit No. of units sold Total Sales 250 8,000 2,000,000 Variable Cost   Direct Material 100   Direct Labor 50   Variable Overhead 30...
2 Pages(500 words)Essay

Variable and Fixed Costs

... in the absorption costing, all the variable expenses under the contribution income statement are deducted from the sales to get the contribution margin. This is followed by deducting fixed costs from the contribution margin to get the net profit or loss for a particular period. Under the absorption costing and contribution costing the net income is always the same only when the inventory is the same. Otherwise the income is higher under the absorption income statement that in the contribution income statement when the inventory is higher. Even though the fixed production costs under the contribution income statement are aggregated at the lower part of the income statement, all the variable and the administrative expenses are taken...
2 Pages(500 words)Essay

Allocating Fixed Costs

...Finance & Accounting Finance & Accounting Part I Costing systems help in ascertaining the cost of product with reference to the revenue that it generates. Usually there are two costing systems that are used to determine the product cost – Traditional costing and Activity based costing. Traditional costing system witnesses companies allocating their production costs only on the basis of the quantity of the production. The basic assumption is that volume of the goods produced is the only driver of the manufacturing costs. Contrastingly, Under the Activity based costing (ABC) system; companies allocate the costs of producing the goods in accordance with the total activities that are needed to manufacture the relevant products. ABC initially...
3 Pages(750 words)Essay

Decision Making For Management - Linearity of Variable Costs within the Relevant Range

Keeping aside the fixed costs which have to be borne irrespective of the sales revenue, the remaining costs which are directly proportional to units sold can be minimized to manage cash flows in a better way. They can cut on their variable costs by having a look at the contribution margins of their company and their products.

The contribution of sales to before-tax profits, or gross profits, over and above the break-even is exactly the contribution margin as there are no fixed costs any more. The amount after the deduction of variable costs from the revenues will be added to the profits.

CVP graphs help the manager and the reader to have a better figure of the relationship between the profits, sales and volum...
7 Pages(1750 words)Assignment

How the Evolvement of Heritage Tourism Contributes to the Preservation and Maintenance of Museums

This paper will discuss how the philosophy of heritage tourism has developed and how the evolvement of heritage tourism contributes to the preservation and maintenance of museums. It will further highlight the educational role that museums play in society.

Heritage is anything that is transmitted from the past and could include original cultural and natural material, the built environment, the archaeological resource, the intangible heritage and the natural heritage (Nurick, 2000). There is some significance attached to these which make it worth preserving for the self as well as for the future generations. The UK’s heritage is a major contributor to the tourism industry. Virtually all tourism in the UK is partial...
12 Pages(3000 words)Case Study

Aircraft Maintenance Technology in Today Use

Aircraft Maintenance technology relates to the actions required to improve the airworthiness and the designed-in reliability of an aircraft and its systems, subsystems, and components throughout the life cycle of the aircraft. Aircraft Maintenance Technicians (AMTs) perform or supervise maintenance, preventive maintenance, and alteration of aircraft and aircraft systems in accordance with the provisions of Federal Aviation Regulations.

As the aviation technology made it progress, it was necessary to bring in the maintenance of all the aircraft for it’s prolonged and safety use. From the time it started, aircraft maintenance has gone through a series of changes. From basic to improvised and now the high-tech mainte...
7 Pages(1750 words)Report

Importance and Changes in the Level of Interest Rates to Banking and Insurance Sector in the UK

Indicatively, Ahiakport (2003, 42) noticed that “interest is compensation for the use of capital; not necessarily money”. Moreover, the above researcher mentioned that in general “quantity of money determines the supply of liquid resources, and hence the rate of interest, and in conjunction with other factors (particularly that of confidence) the inducement to invest” (Ahiakport, 2003, 55). In other words, interest rates are related to the capital both directly and indirectly. The direct relation refers to the increase of capital under the influence of specific interest rates, while the indirect relation can be assumed by the ‘attraction’ of foreign funds in a particular country due to high-inte...
14 Pages(3500 words)Term Paper

Human Resource Strategy for Northampton Insurance Company

Education, profession, geographic location and parental status are some of the dimensions which influence the perspectives and identities of people; this is the basic interpretation of diversity. Using diversity as a concept, it includes everyone. In several ways, the initiatives of diversity match the compliance programs of non-discrimination through crafting an environment for the workplace and promoting an organizational culture that allows for such differences. Diversity is also about dignity and respect for all, about learning from others who are not similar to us, and about building environments and practices for the workplace which will encourage learning from others and being able to grasp the benefits of this diversity (H...
11 Pages(2750 words)Case Study

Aircraft Maintenance Training Needs in Both The Commercial and Light Aviation Sectors of the UK

The aerospace industries which is at the forefront of wealth production worldwide, and continue to be of crucial importance to the economic strength of the UK rely on skills in a sound understanding of engineering and science areas relating to aircraft design and manufacture. Avionics institutions productions and outputs in terms of graduates in the field of engineering were surveyed by way of mailed questionnaires to gain the perspective on the prospects of manpower supply to satisfy the demand for avionics engineers. It was also geared towards awareness of the limiting factors confronting potential candidates for training.

The study revealed that: all-male composed the aircraft maintenance engineers’ population...
45 Pages(11250 words)Dissertation

Costs, Benefits and Risks of MerloniS Current Distribution System

Each supply-chain risk to forecasts, information systems, intellectual property, procurement, inventory, and capacity has its own drivers and effective mitigation strategies. To avoid lost sales, increased costs or both, managers need to tailor proven risk-reduction strategies to their organizations.” (Sodhi)

Distribution systems play an important role in the overall functioning of the supply chain management system of an organization. Any good distribution system requires that all the associated activities are coordinated in such a way that they facilitate the whole flow of organizational resources from one point to another. This is important because of the fact that a swift and smooth flow of organizational reso...
10 Pages(2500 words)Case Study

Drug Abuse Costs

The therapy subject to consideration in this proposal is Cognitive therapy which “attempts to identify and define maladaptive thoughts or beliefs” that contribute to addiction and/or relapse (Holder, et al., 1996, p. 520). Cognitive therapy is delivered in a variety of treatment modalities that range from inpatient and residential facilities to outpatient programs.
Langenbucher (1996) identifies analytical tools that can be used to identify the value of treatment for drug and alcohol abuse that succinctly addresses program costs. Some elements included in his framework are cost-of-illness, cost-offset and cost-benefit analyses which focus on the cost of the disease if it is left untreated. This type of analysis e...
6 Pages(1500 words)Term Paper

Lack of Health Insurance for the Mentally Ill

Worse, because the family sometimes cannot afford to cover their medical expenses, these mentally ill patients end up with no medical care at all; they are forced to suffer the debilitating symptoms of their mental illness and to be subjected to worsening mental and general health conditions.
This paper shall discuss the lack of insurance among mentally ill patients. It shall first describe the mental health issue and the student’s position on such an issue. This paper shall also explain why this position is important and the relevance of the position to nursing practice, the mentally ill, and society. The rationale of this position shall be clearly explained and two factors that contribute to this issue shall be identi...
8 Pages(2000 words)Assignment

Aircraft Maintenance Control

... explains various laws for the continuing airworthiness and aircraft maintenance subject to EASA regulation (Civil Aviation Authority). Therefore, the emerging CAMO regulations make the maintenance controllers responsible for taking every possible measure to ensure the aircraft’s airworthiness. As discussed earlier, both the CAMO and a maintenance controller have almost similar objectives and purposes. Likewise, a maintenance controller should effectively manage the costs associated with the operator’s aircraft maintenance. In the opinion of Lampe, Strassner, and Fleisch (2006), maintenance, repair, and overhaul (MRO) costs represent 12% of the total operating costs of an aircraft (p.62). For the effective maintenance of an aircraft...
6 Pages(1500 words)Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Case Study on topic Fixed Costs: Depreciation Expenses, Maintenance and Repairs, Amortization, Insurance, and Taxes for FREE!

Contact Us