Question

depreciation methods utica machinery company purchases an asset for $1,200,000. after the machine has been used for 25,000 hours, the company expects to sell the asset for $150,000. what is the depreciation rate per hour based on activity? $fill in the blank 1 per hour

Answer 1

The depreciation rate per hour based on activity is $42 per hour.

Step-by-step explanation:

The depreciation rate per hour based on activity can be calculated by determining the difference between the initial cost of the asset and the expected residual value, and then dividing that by the expected total hours of use.

In this case, the initial cost of the asset is $1,200,000 and the expected residual value is $150,000. The expected total hours of use is 25,000.

Using the formula:

Depreciation Rate per hour = (Initial Cost - Residual Value) / Total Hours of Use

Depreciation Rate per hour = ($1,200,000 - $150,000) / 25,000

Depreciation Rate per hour = $1,050,000 / 25,000

Depreciation Rate per hour = $42 per hour