Question

On January​ 1, 2018, Tyson Manufacturing Corporation purchased a machine for $ 40 comma 500 comma 000. ​Tyson's management expects to use the machine for 31 comma 000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $ 44 comma 000. The machine was used for 4 comma 000 hours in 2018 and 5 comma 000 hours in 2019. What is the depreciation expense for 2018 if the corporation uses the unitsminusofminusproduction method of​ depreciation? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

Answer 1

$5,220,128.80

Step-by-step explanation:

For computing the depreciation expense for 2018 under the units of production method, first we have to determine the per unit which is shown below

= (Original cost - residual value) ÷ (estimated production hours)

= ($40,500,000 - $44,000) ÷ (31,000 hours)

= ($40,456,000) ÷ (31,000 hours)

= $1,305 0.322

Now for the year 2018, it would be

= Production hours in 2018 × depreciation per unit

= 4,000 hours × $1,305 0.322

= $5,220,128.80