Ramirez Company installs a computerized manufacturing machine in its factory at

Question

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $45,000. The machine's useful life is estimated at 10 years, or 390,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 34,000 units of product.

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

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $45,000. The machine's useful life is estimated at 10 years, or 390,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 34,000 units of product.

Explanation / Answer

Depreciation = (45,000-6,000)/390,000*34,000 = $3,400

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