A machine costing $209,800 with a four-year life and an estimated $19,000 salvag

Question

A machine costing $209,800 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 477,000 units of product during its life. It actually produces the following units: 121,900 in 1st year, 123,400 in 2nd year, 120,000 in 3rd year, 121,700 in 4th year. The total number of units produced by the end of year 4 exceeds the original estimate—this difference was not predicted. (The machine must not be depreciated below its estimated salvage value.) Required: Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method. (Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar.)

Explanation / Answer

The fourth year depreciation expense: $48680-4000 = $44680

Hence Total Accumulated depreciation is 190800

Cost of machine ; 209800 Est. Salvage value -19000 Total Depr. Cost; 190800 Estimated Production 477000 Depreciation Rate Per Unit =190800/477000 0.4

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