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 $43,500. The machine's useful life is estimated at 10 years or 385,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 32,500 units of product Determine the machine's second-year depreciation and year end book value under the straight-line method Straight Line Depreciation Choose Numerator: Choose Denominator: Annual Depreciation Expense Depreciation expense Year 2 Depreciation Year end book value (Year 2) es

Answer 1

Depreciation per unit = (cost - salvage value) / estimated units of production

= (43,500 - 5,000) / 385,000

= 0.1 per unit

Depreciation expense for year 2 = number of units produced in the year * depreciation per unit

= 32,500 * 0.1

= $3,250