A machine costing $211,200 with a four-year life and an estimated $16,000 salvag

Question

A machine costing $211,200 with a four-year life and an estimated $16,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 488,000 units of product during its life. It actually produces the following units: 122,500 in 1st year, 123,700 in 2nd year, 119,800 in 3rd year, 132,000 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 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.) ok Complete this question by entering your answers in the tabs below. Straight Line Units of DDB Compute depreciation for each year (and total depreciation of all years combined) for the machine under each Units of Units of Pr Depreciable Depreciation Deprec per unit

Explanation / Answer

Depreciation per unit = [cost-salvage ]/estimated life in units

             =[211200-1600]/488000

           = .40 per unit

since the total actual units equals :122500+123700+119800+132000=498000

estimated units = 488000

Difference : 498000-488000=10000

since the salvage required at end is 16000 therefore depreciable units for year 4   is restricted by 10000

Unit of production method year Depreciable units Depreciation per unit Depreciation expense 1 122500 .40 49000    [122500*.40] 2 123700 .40 49480 3 119800 .40 47920 4 132000-10000=122000** .40 48800 Total 488000 195200

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.