Help!?! From Class ITE 385 - Using the book: Cost analysis Estimating for Engine

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Help!?!

From Class ITE 385 - Using the book: Cost analysis Estimating for Engineering and Management. -Ostwald/McLaren

Homework30a Question 1 0 1 point The Seven Brides Division of Block C Enterprises purchased a CNC machine for use in their plant 9 years ago. The machine had a purchase price of $150K and a salvage value of $10K. The machine had an expected life of 8 years at 2000 hours per year but was not be used full time and was depreciated based upon its hourly usage. The accumulate depreciation is 14700 hours. Calculate the depreciation cost for this machine this year based on a usage of 1800 hours. $7000 $8167 $11000 $11375 · $15750 $18000 $21000 $25200

Explanation / Answer

1) expected depreciation in 8 years = $150K - $10K = $140K

expected depreciation per year = $140K/8 = $17500

Therefore, depreciation in 2000 hours = $17500 ( each year had 2000 hours expected)

Now, the depreciation was expected over 8*2000 = 16000 hours

Accumulated hours = 14700

Remaining hours = 16000 - 14700 = 1300 hours

Therefore, depreciation in 1300 hours = 1300*17500 /2000 = $11375

2)

expected depreciation in 5 years = $100K - $5K = $95K

expected depreciation per year = $95K/5 = $19K

Therefore, depreciation in 2000 hours = $19K ( each year had 2000 hours expected)

Now, the depreciation was expected over 5*2000 = 10000 hours

Accumulated hours = 9500

Remaining hours = 10000- 9500= 500hours

Therefore, depreciation in 500 hours = 500*19000/2000 = $4750

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