Devon Manufacturing Company purchased a new canning machine on July 1, 2013, for $190,000. The estimated salvage value is $15,000. The company uses units-of-production depreciation and estimates the machine will produce 125,000 units during its useful life. In 2013, the company manufactured 5,000 units after acquiring the machine. Depreciation expense for 2013 will be

Question

Quizplus · Accepted Answer

Depreciation per unit = (Cost of asset - Estimated salvage value) / Estimated total units of production
= ($190,000 - $15,000) / 125,000
= $1.40 per unit

Depreciation expense for 2013 = Depreciation per unit x Units produced in 2013
= $1.40 x 5,000
= $7,000

Devon Manufacturing Company Purchased a New Canning Machine on July