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Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $44,200. The machine's useful life is estimated at 10 years, or 392,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 33,200 units of product.

Exercise 8-5 Units-of-production depreciation LO P1

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

	Units-of-production Depreciation Choose Numerator: / Choose Denominator: = Annual Depreciation Expense / = Depreciation expense per unit / = 0 Year Annual Production (units) Depreciation Expense 2

Answer 1

WORKING NOTES:
	CALCULATION OF THE DEPRECIABLE COST
	Purchase Cost of Truck	$                                  44,200
	Less: Salvage Value =	$                                     5,000
	Net Value for Depreciation (A)	$                                  39,200
SOLUTION =
	CALCUATION OF DEPRECIATION EXPENSES
	Year	Choose Numertor	"/	Choose Denominator	=	Depreciaiton Expenses Per Unit
	Depreciation Expenses =	Depreciable Value of the Assets	"/	Anuual Production	=	Depreciaiton Expenses Per Unit
	Depreciation Expenses =	39,200	"/	33,200	=	1.18
Answer = Depreciation Per Unit = $ 1.18