On January 1, 2012, Woodson Inc. purchased a machine that cost $500,000 and had
ID: 2445352 • Letter: O
Question
On January 1, 2012, Woodson Inc. purchased a machine that cost $500,000 and had a residual value of $50,000. The machine is expected to produce 360,000 units of cheese and is estimated to last 10 years. If 25,000 units were produced in 2012 and 35,000 were produced in 2013, what amount of Accumulated Depreciation is reported at the end of 2013 using the activity-based method (rounded to the nearest whole dollar if necessary)? Selected Answer: Incorrect [None Given] Answers: A. $83,333 CorrectB. $75,000 C. $43,750 D. $90,000 E. $31,250 PLEASE PROVIDE EXPLANATION
Explanation / Answer
Activity Based Depriciation = No of units produced cumulatively at the end of 2013/Total no of units the machine can produce * (Total value of machine - salvage value)
= 25000+35000 * (500000-50000)
360000
= 31250
The accumulated balance is 31250
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