Marshall Company purchases a machine for $800,000.The machine has an estimated residual value of $40,000.The company expects the machine to produce two million units.The machine is used to make 400,000 units during the current period. If the units-of-production method is used,the depreciation rate is:
A)$1.90 per unit.
B)$0.38 per unit.
C)$0.10 per unit.
D)$2.00 per unit.

Question

Quizplus · Accepted Answer

Depreciation rate = (Cost − Residual value)÷ Estimated total production
= ($800,000 − $40,000)÷ 2,000,000 units = $0.38 per unit

Marshall Company Purchases a Machine for $800,000