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1 September, 06:11

Heatherbrae Co. uses the units-of-production method to estimate depreciation. The company purchased a new machine for $48,000 that will produce an estimated 330,000 units over its useful life. The estimated residual value of the machine is $4,000. What is the depreciation rate per unit?

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  1. 1 September, 06:35
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    Depreciation per unit = 0.133 (Approx)

    Explanation:

    Given:

    Cost of machine = $48,000

    Total unit produced = 330,000 units

    Residual value of the machine = $4,000.

    Depreciation rate per unit = ?

    Computation of depreciation rate per unit:

    Depreciation per unit = (Cost of machine - Salvage value) / Total unit produced

    Depreciation per unit = ($48,000 - $4,000) / 330,000 units

    Depreciation per unit = ($44,000) / 330,000 units

    Depreciation per unit = 0.133 (Approx)
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