Final answer:
To find the depreciation rate per unit for the machine, we subtract the residual value from the purchase price to determine the total depreciable amount. Then, we divide this amount by the total expected units of production over the machine's life. The calculated rate is $38 per unit, which does not align with the given options.
Step-by-step explanation:
To calculate the depreciation rate per unit using the units of production method for the machine purchased by Tiny Company, we first subtract the residual value from the cost of the machine. This gives us the total amount of depreciation over the machine's useful life. We calculate the total number of units over all years and then divide the total depreciation by the total number of units to find the depreciation rate per unit.
The purchase price is $2,000,000, and the residual value is $100,000. The expected units of production are 20,000 in the first year, 15,000 in the second year, 10,000 in the third year, and 5,000 in the fourth year for a total of 50,000 units over the life of the machine. The total depreciable amount is $2,000,000 - $100,000 = $1,900,000.
The depreciation rate per unit is calculated as $1,900,000 total depreciable amount / 50,000 total units = $38 per unit. However, this does not match the options given in the question, suggesting there might be a need to revisit the provided figures or the approach to answer this specific question.