Question

Marshall company purchases a machine for 800,000. The machine has an estimated residual value of 40,000, The company expects the machine to produce 2,000,000 units. the machine is used to make 400,000 units during this period. use units of production method. The depreciation expense for this period is:

a.160,000
b.800,000
c.152,000
d.760,000

Answer 1

The depreciation expense using the units of production method is $152,000.

Step-by-step explanation:

To calculate the depreciation expense using the units of production method, we need to determine the per unit depreciation rate. This can be calculated by subtracting the estimated residual value from the cost of the machine and dividing it by the expected number of units to be produced. In this case, the per unit depreciation rate would be (800,000 - 40,000) / 2,000,000 = 0.38.

Next, we multiply the per unit depreciation rate by the actual number of units produced during the period. Therefore, the depreciation expense for this period would be 0.38 * 400,000 = 152,000.

So, the correct answer is c. 152,000.