Question

14. A conveyor machine cost $30,200, has an estimated residual value of $4,000, and an expected life of 150,000 units. What would be the depreciation in year 3 if 40,000

units were produced? (Round to nearest cent.)
O A. $8,600
O B. $23,400
OC. $26,200
O D. $6,800

Answer 1

D

Explanation:

We can use the units-of-production depreciation method to calculate the depreciation in year 3, since we know the estimated life of the machine in terms of units produced.

First, we need to calculate the depreciation per unit:

Depreciation per unit = (Cost - Residual value) / Expected number of units

Depreciation per unit = ($30,200 - $4,000) / 150,000 units

Depreciation per unit = $0.176 per unit

Next, we can calculate the total depreciation for year 3 based on the number of units produced:

Depreciation for year 3 = Depreciation per unit x Units produced in year 3

Depreciation for year 3 = $0.176 per unit x 40,000 units

Depreciation for year 3 = $7,040

Therefore, the depreciation in year 3 would be $7,040. This corresponds to option D.