On January 1,2016,Milton Manufacturing Company purchased equipment with a list price of $88,000.A total of $4,000 was paid for installation and testing.During the first year,Milton paid $6,000 for insurance on the equipment and another $2,200 for routine maintenance and repairs.Innovative uses the units-of-production method of depreciation.Useful life is estimated at 100,000 units,and estimated salvage value is $8,000.During 2016,the equipment produced 13,000 units.What is closest to the amount of depreciation for the year?

Question

Quizplus · Accepted Answer

Depreciation = (Cost - Salvage Value) / Useful Life in Units * Units Produced= (88,000 + 4,000 - 8,000) / 100,000 * 13,000= 84,000 / 100,000 * 13,000= 0.84 * 13,000= $10,920

On January 1,2016,Milton Manufacturing Company Purchased Equipment with a List