The price of a corporate car purchased by Wright & Company was $33,200. Its salvage value after operating for 120,000 miles is $3,200. Using the units-of-production method, given the annual usage information, calculate the annual depreciation for year 5. (Round all dollar amounts to the nearest cent) $$\begin{array} { l l l l }
\text { YEAR } & \text { MILES } & \text { YEAR } & \text { MILES } \
\hline 1 & 23,026 & 2 & 27,683 \
3 & 22,509 & 4 & 28,200
\end{array}$$

Question

The price of a corporate car purchased by Wright & Company was $33,200. Its salvage value after operating for 120,000 miles is $3,200. Using the units-of-production method, given the annual usage information, calculate the annual depreciation for year 5. (Round all dollar amounts to the nearest cent) $$\begin{array} { l l l l } 
\text { YEAR } & \text { MILES } & \text { YEAR } & \text { MILES } \
\hline 1 & 23,026 & 2 & 27,683 \
3 & 22,509 & 4 & 28,200
\end{array}$$

Quizplus · Accepted Answer

The total depreciable amount is $33,200 - $3,200 = $30,000. The total estimated mileage is 120,000 miles. The depreciation per mile is $30,000 / 120,000 = $0.25 per mile. For year 5, the mileage is 120,000 - (23,026 + 27,683 + 22,509 + 28,200) = 18,582 miles. The depreciation for year 5 is 18,582 miles * $0.25 = $4,645.50. However, the correct choice is C, which is $6,985.50, indicating a possible error in the mileage calculation or choice options.

The Price of a Corporate Car Purchased by Wright A) $2,98800 B) $4,645

The Price of a Corporate Car Purchased by Wright A) $2,98800
B) $4,645