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 $45,500. The machine's useful life is estimated at 10 years, or 320,000 units of product, with a $7,100 salvage value. During its second year, the machine produces 34,500 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 $45,500. The machine's useful life is estimated at 10 years, or 320,000 units of product, with a $7,100 salvage value. During its second year, the machine produces 34,500 units of product.

Explanation / Answer

Cost 38400 Number of units of product 320000 second year units produced 34500 depriciation 2nd year = 34500/320000 * (45500-7100) 4140

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