Asked by Preet Sangha on Apr 27, 2024
Verified
What would be the depreciation expense in year 1, using units-of-production, for a molding machine that cost $25,000, had a useful life of 8 years, and an estimated total machine hours of 30,000? The salvage value is $3,000 and production in year 1 was 8,000 hours. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)
A) $3,125
B) $6,667
C) $5,000
D) $5,840
Units-of-production
A depreciation method that allocates the cost of an asset over its useful life based on the number of units it produces.
Molding Machine
A machine used in manufacturing to shape liquid or pliable raw material using a rigid frame called a mold.
- Compute the depreciation expense through multiple methodologies, such as straight-line, double declining-balance, and units-of-production approaches.
Verified Answer
MW
Megan WillisMay 01, 2024
Final Answer :
D
Explanation :
The depreciation expense using the units-of-production method is calculated by [(Cost - Salvage Value) / Total Estimated Units of Production] * Units Produced in Year 1. Here, it's [($25,000 - $3,000) / 30,000] * 8,000 = $5,840.
Learning Objectives
- Compute the depreciation expense through multiple methodologies, such as straight-line, double declining-balance, and units-of-production approaches.
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