Heatherbrae Co.uses the units-of-production method to estimate depreciation.The company purchased a new machine for $45,000 that will produce an estimated 100,000 units over its useful life.The estimated residual value of the machine is $5,000.What is the depreciation rate per unit?
A)$4.00
B)$4.50
C)$0.40
D)$0.45

Question

Quizplus · Accepted Answer

Depreciation rate per unit = (Cost − Residual value)÷ Estimated total production
= ($45,000 − $5,000)÷ 100,000 units = $0.40 per unit