On January 1, 2018, Tyson Manufacturing Corporation purchased a machine for $41,100,000. Tyson's management expects to use the machine for 32,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $47,000. The machine was used for 4000 hours in 2018 and 6000 hours in 2019. What is the depreciation expense for 2018 if the corporation uses the units-of-production method of depreciation? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The units-of-production method calculates depreciation based on actual usage. The cost minus residual value is divided by total estimated hours to find the rate per hour. Then, multiply by hours used in 2018: (($41,100,000 - $47,000) / 32,000) * 4,000 = $5,131,640.

On January 1, 2018, Tyson Manufacturing Corporation Purchased a Machine