Dynatech Corporation acquired a piece of machinery on January 3,2010.The total cost of the machinery was $172,500.Dynatech estimated that the machinery would be used for 60,000 hours before being sold for an estimated $7,500.Dynatech uses the units-of-production method of depreciation.Assuming the machine was used for 18,750 hours during the year ended December 31,2010,the depreciation expense rate per hour for 2010 was:
A)$9.20
B)$8.92
C)$2.88
D)$2.75

Question

Quizplus · Accepted Answer

The depreciation expense rate per hour is calculated by subtracting the salvage value from the cost and then dividing by the total estimated usage hours. ($172,500 - $7,500) / 60,000 hours = $2.75 per hour.

Dynatech Corporation Acquired a Piece of Machinery on January 3,2010