Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below.) Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $84,600. The machine's useful life is estimated at 20 years, or 393.000 units of product, with a $6.000 salvage value. During its second year, the machine produces 33.300 units of product. Determine the machine's second-year depreciation using the units-of-production method. Units-of-production Depreciation Choose Denominator Annual Depreciation Expense Depreciation expense per unit Choose Numerator: Year Annual Production (units) Depreciation Expense

Explanation / Answer

Calculate depreciation :

Unit of production Depreciation Choose numerator / Choose denominator = Annual depreciation expense Depreciable base / Estimated unit production = Depreciation per unit 78600 / 393000 = 0.2 per unit Year Annual production (units) * Depreciation per unit = Depreciation expense 2 33300 * 0.2 = 6660

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