Question

Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $48,400. The machine's useful life is estimated at 10 years, or 394,000 units of product, with a $9,000 salvage value. During its second year, the machine produces 33,400 units of product.

Required:
Determine the machine's second-year depreciation using the units-of-production method.

Answer 1

$3,340

Step-by-step explanation:

Step 1 : Determine the Depreciation rate

Depreciation rate = Cost - Salvage Value ÷ Estimated Units

Depreciation rate = $0.10

Step 2 : Depreciation Expense

Depreciation Expense = Depreciation rate x units produced

Depreciation Expense = $3,340

Therefore,

the machine's second-year depreciation using the units-of-production method is $3,340