A company acquired 900 pounds of Material A at a total cost of $10,000. The company then processed the 900 pounds of Material A into 700 pounds of Material B and 200 pounds of Material X at a cost of $5,000. Material B can be sold for $50 per pound. However, the company also has the option to process the 700 pounds of Material B into 550 pounds of material C (150 pounds are lost in the conversion process). The processing costs would amount to $4,000. The market value of material C is $75 per pound. If the company chooses to process material B into material C, what is the effect on profitability? O Decrease in profitability of $12,750 Increase in profitability of $2,250 Increase in profitability of $6,250 Increase in profitability of $41,250 O None of the above

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Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.