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19 July, 22:09

Marshall Company purchases a machine for $200,000. The machine has an estimated residual value of $80,000. The company expects the machine to produce four million units. The machine is used to make 440,000 units during the current period. If the units-of-production method is used, the depreciation expense for this period is:

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  1. 19 July, 23:10
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    The depreciation expense for this period is: $13,200

    Explanation:

    The depreciation charge using units of production is calculated as follows:

    Depreciation Expense = (Cost - Salvage Value) * (Period's Production / Total Expected Production)

    = ($200,000 - $80,000) * 440,000 units / 4,000,000 units

    = $13,200

    Conclusion:

    The depreciation expense for this period is: $13,200
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