Case study- business
A. Compute the straight line depreciation for equipment for each year with a cost of $50,000, a 5-year useful life, and a $5,000 salvage value.
B. Identify a project or purchase in your current position/employment and discuss how a break even analysis or understanding contribution margin would be beneficial.
- Straight-line annual depreciation for equipment
As Del, Manganelli & De Paola, (2016) say, coupled with some advantages like the easiness in calculations, the method can be used for reporting and accounting purposes in our vascular and endovascular department. See below, the calculations leading to an annual depreciation of $9,000.
Annual depreciation = (cost of equipment – salvage value)
Approximated useful life years
Cost of equipment = $50,000
Salvage/resale value = $5,000
Useful life years = 5
Therefore, depreciation per year = (50,000 – 5,000) / 5
= 45,000 / 5
= $9,000 p.a.
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