Mott Company uses the units-of-activity method in computing depreciation.A new plant asset is purchased for $24,000 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 depreciation cost per unit?

Question

Quizplus · Accepted Answer

The depreciation cost per unit is calculated by subtracting the residual value from the cost of the asset and then dividing by the total estimated units. ($24,000 - $2,000) / 100,000 units = $0.22 per unit.

Mott Company Uses the Units-Of-Activity Method in Computing Depreciation