Question

Marshall Company purchases a machine for $800,000. The machine has an estimated residual value of $40,000. The company expects the machine to produce two million units. The machine is used to make 400,000 units during the current period. If the units-of-production method is used, the depreciation expense for this period is:

Answer 1

Answer:

$152,000

Explanation:

Depreciation expense = (Cost − Residual value) × (Actual production this period ÷ Estimated total production)

= ($800,000 − $40,000) × (400,000 units ÷ 2,000,000 units) = $152,000