What would be the depreciation expense in year 1,using units-of-production,for a molding machine that cost $18,000,had a useful life of 3 years,and an estimated total machine hours of 36,000? The salvage value is $3,000 and production in year 1 was 10,000 hours.

Question

Quizplus · Accepted Answer

First, we need to calculate the depreciation rate per hour: 
Depreciation rate per hour = (cost - salvage value) / estimated total machine hours 
Depreciation rate per hour = ($18,000 - $3,000) / 36,000 = $0.4167 per hour

Then, we can calculate the depreciation expense for year 1: 
Depreciation expense = depreciation rate per hour x production in year 1 
Depreciation expense = $0.4167 x 10,000 = $4,167

Therefore, the answer is B.

What Would Be the Depreciation Expense in Year 1,using Units-Of-Production,for