Question

For a fitness center purchasing a $3,000 photocopier expected to produce 30,000 copies with no salvage value at the end of the photocopier’s useful life, calculate the units of production depreciation schedule (for each year) if the following number of copies are expected to be made each year:

Year 1―12,000
Year 2―8,000
Year 3―6,000
Year 4―3,000
Year 5―1,000

Answer 1

Depreciation expense per year

Year 1 = $1200

Year 2 = $800

Year 3 = $600

Year 4 = $300

Year 5 = $100

Step-by-step explanation:

To determine the depreciation expense under the units of production/activity method of charging depreciation, we will first calculate the depreciation expense per unit and then multiply it with the units of production in each year to calculate the depreciation expense for that year.

The formula for depreciation under this method is attached.

Depreciation per unit = (3000 - 0) / 30000 = $0.1 per copy

Depreciation expense per year

Year 1 = 0.1 * 12000 = $1200

Year 2 = 0.1 * 8000 = $800

Year 3 = 0.1 * 6000 = $600

Year 4 = 0.1 * 3000 = $300

Year 5 = 0.1 * 1000 = $100