Asked by Dionne Duncan on Jul 27, 2024
Verified
Determine the machines' first year depreciation under the units-of-production method.
A) $27,000.
B) $54,000.
C) $24,000.
D) $25,800.
E) $48,000.
Units-Of-Production Method
A depreciation method in which an asset's cost is allocated based on the number of units it produces.
Salvage Value
Salvage value is the estimated residual value of an asset at the end of its useful life.
- Implement assorted depreciation approaches to determine depreciation charges.
Verified Answer
UM
Uriah McgeeJul 30, 2024
Final Answer :
D
Explanation :
To calculate depreciation using the units-of-production method, we need to first calculate the depreciation rate per unit.
Depreciable cost = cost - salvage value = $135,000 - $15,000 = $120,000
Depreciation rate per unit = depreciable cost / total units of production over the machine's life = $120,000 / 300,000 units = $0.40 per unit
To calculate the first year depreciation, we simply multiply the depreciation rate per unit by the number of units produced in the first year:
First year depreciation = depreciation rate per unit * units produced in first year
First year depreciation = $0.40 * 64,500 units = $25,800
Therefore, the correct answer is (D) $25,800.
Depreciable cost = cost - salvage value = $135,000 - $15,000 = $120,000
Depreciation rate per unit = depreciable cost / total units of production over the machine's life = $120,000 / 300,000 units = $0.40 per unit
To calculate the first year depreciation, we simply multiply the depreciation rate per unit by the number of units produced in the first year:
First year depreciation = depreciation rate per unit * units produced in first year
First year depreciation = $0.40 * 64,500 units = $25,800
Therefore, the correct answer is (D) $25,800.
Learning Objectives
- Implement assorted depreciation approaches to determine depreciation charges.
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