Bay of Fundy Company uses the units-of-production method in calculating depreciation. A new piece of equipment is purchased for $18,000 that will produce an estimated 100,000 units over its useful life. Estimated residual value at the end of its useful life is $2,000. What is the depreciable cost per unit?
A) $1.60
B) $1.80
C) $0.16
D) $0.18

Question

Quizplus · Accepted Answer

Depreciable cost = $18,000 - $2,000 = $16,000Depreciable cost per unit = $16,000 / 100,000 units = $0.16

Bay of Fundy Company Uses the Units-Of-Production Method in Calculating