The Doodad Company purchases a machine for $400,000.The machine has an estimated residual value of $20,000.The company expects the machine to produce two million units.The machine is used to make 400,000 units during the current period.
-Use the information above to answer the following question.If the units-of-production method is used,the depreciation rate is:
A) $0.95 per unit.
B) $0.19 per unit.
C) $0.05 per unit.
D) $1.00 per unit.

Question

Quizplus · Accepted Answer

Depreciation per unit = (Cost - Residual value) / Estimated total units of production
= ($400,000 - $20,000) / 2,000,000
= $0.19 per unit.

The Doodad Company Purchases a Machine for $400,000