Question

9 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 $49,000. The machine's useful life is estimated at 10 years, or 400,000 units of product, with a $9,000 salvage value During its second year, the machine produces 34.000 units of product Determine the machine's second-year depreciation using the units-of-production method. Ameat DectionExpense Choose Numerator IChoose Denominator: Depreciation expense per unit Year Annual Production (units Depreciation Expense

Answer 1

Answer:

Units of production Depreciation
	Choose Numerator	/	Choose Denominator	=	Annual Depreciation Expense
	(Cost - Salvage Value)		Total units of production	=	Depreciation Expense per unit
	$40,000		400,000	=	$0.10
Year	Annual Production(units)		Depreciation Expense
	34,000		$3400

Solution:

Data Given:

Cost of machine (Cost) = $49000

Salvage value = $9000

Total units of production = 400,000

units produced in 2nd year = 34,000

Method:

$Depreciation~ per~ unit = \frac{(Cost~-Salvage ~ Value)}{Total ~units ~of ~production}$

$Depreciation~ per~ unit = \frac{(49,000-9000)}{400,000}=\frac{40,000}{400,000}=0.1$

so Depreciation per unit = $0.1

For 34,000 units produced in second year will depreciate the value by

$=34,000\times ~\$ ~0.1 = \$ ~3400$