A company uses the units of production method for a machine that produces 100,00

What’s inside this PDF?

Question: A company uses the units of production method for a machine that produces 100,000 units over its life. If the machine costs $40,000 and has a salvage value of $4,000, what is the depreciation per unit?

Options:

$0.36
$0.40
$0.44
$0.50

Correct Answer: $0.36

Solution:

Depreciation per unit = (Cost - Salvage Value) / Total Units = ($40,000 - $4,000) / 100,000 = $0.36.

Practice Questions

Q1

A company uses the units of production method for a machine that produces 100,000 units over its life. If the machine costs $40,000 and has a salvage value of $4,000, what is the depreciation per unit?

$0.36
$0.40
$0.44
$0.50

Questions & Step-by-Step Solutions

A company uses the units of production method for a machine that produces 100,000 units over its life. If the machine costs $40,000 and has a salvage value of $4,000, what is the depreciation per unit?

Step 1: Identify the cost of the machine, which is $40,000.
Step 2: Identify the salvage value of the machine, which is $4,000.
Step 3: Identify the total number of units the machine will produce over its life, which is 100,000 units.
Step 4: Calculate the total depreciation by subtracting the salvage value from the cost: $40,000 - $4,000 = $36,000.
Step 5: Calculate the depreciation per unit by dividing the total depreciation by the total number of units: $36,000 / 100,000 = $0.36.

Units of Production Method – A method of calculating depreciation based on the actual usage of an asset.
Depreciation Calculation – Understanding how to calculate depreciation using cost, salvage value, and total units produced.

A company uses the units of production method for a machine that produces 100,00

What’s inside this PDF?

A company uses the units of production method for a machine that produces 100,00

Practice Questions

Questions & Step-by-Step Solutions

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