Depreciation expense found in the SG&A line of the income statement for a manufacturing firm would most likely be attributable to the wear and tear of which asset?

• A. Computers used by the Accounting Department
• B. Factory Machinery
• C. Office Furniture
• D. Vehicles Used by Sales Force

Answer: (A)

Depreciation is allocated to the functions those assets support. In a manufacturing firm, depreciation on factory machinery is tied to production costs and would flow into cost of goods sold or manufacturing overhead, not SG&A. Depreciation for assets that support selling, general, and administrative activities belongs in SG&A. A computer used by the accounting department is a classic example of an SG&A asset because it directly supports administrative and financial tasks. While office furniture or a vehicle used by the sales force can also be SG&A items, the accounting computer is the most straightforward and consistently classified as SG&A depreciation.