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Accounting

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Ramirez Company installs a computerized manufacturing machine inits factory at the beginning of the year at a cost of $44,200. Themachine's useful life is estimated at 10 years, or 392,000 units ofproduct, with a $5,000 salvage value. During its second year, themachine produces 33,200 units of product.

Exercise 8-5 Units-of-production depreciation LO P1

Determine the machine’s second-year depreciation using theunits-of-production method.

Units-of-production Depreciation
Choose Numerator:/Choose Denominator:=Annual Depreciation Expense
/=Depreciation expense per unit
/=0
YearAnnual Production (units)Depreciation Expense
2

Answer & Explanation Solved by verified expert
3.7 Ratings (333 Votes)

WORKING NOTES:
CALCULATION OF THE DEPRECIABLE COST
Purchase Cost of Truck $                                  44,200
Less: Salvage Value = $                                     5,000
Net Value for Depreciation (A) $                                  39,200
SOLUTION =
CALCUATION OF DEPRECIATION EXPENSES  
Year   Choose Numertor   "/ Choose Denominator = Depreciaiton Expenses Per Unit
Depreciation Expenses = Depreciable Value of the Assets "/ Anuual Production   = Depreciaiton Expenses Per Unit
Depreciation Expenses =                                       39,200 "/                             33,200 =                                  1.18
Answer = Depreciation Per Unit = $ 1.18

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