Thread: Depreciation, marginal cost etc.

Hey guys, I'm taking pre-cal at school right now and some problems got me stumped since the textbook doesn't really go over it so I'd appreciate the help.

1. A house and lot valued at $ 77500 is being depreciated over 25 years by the straight-line method . After 21 years, the book value of the asset is $ 25000 . Since only the value of the house depreciates, find the assumed value of the land. (Ignore inflation.)

2 .A manufacturer of small glass figurines discovers that it costs $ 2400 for a production run of 1200 and $ 2600 for a production run of 1500 . Assuming that cost is a linear function of the number of items, find the overhead and the marginal cost of a figurine.

Thanks in advance! If someone could also explain how they arrived at the solution, that would help me the most.

Originally Posted by Shanker

1. A house and lot valued at $ 77500 is being depreciated over 25 years by the straight-line method . After 21 years, the book value of the asset is $ 25000 . Since only the value of the house depreciates, find the assumed value of the land. (Ignore inflation.)

After 21 years: 77500 - 25000 = 52500; so 52500/21 = depreciation per year .... you ok with that?