Question

Blossom Taxi Service uses the units-of-activity method in computing depreciation on its taxicabs. Each cab is expected to be driven 167,000 miles. Taxi 10 cost $33,600 and is expected to have a salvage value of $200. Taxi 10 was driven 32,000 miles in 2021 and 32,700 miles in 2022. Determine the depreciation cost. (Round answer to 2 decimal places, e.g. 1.25.) Depreciable cost $enter the depreciation per unit rounded to two decimal places in dollars per unit eTextbook and Media Compute the depreciation for each year. 2021 2022 Depreciation expense $enter the depreciation for 2021 rounded to 0 decimal places in dollars $enter the depreciation for 2022 rounded to 0 decimal places in dollars eTextbook and Media

Answer 1

Answer:

$0.20 per miles, $6,400, $6,540

Explanation:

The calculation of the depreciation per unit and its expense method is presented below:

= (Original cost - residual value) ÷ (estimate driven miles)

= ($33,600 - $200) ÷ (167,000 miles)

= ($33,400) ÷ (167,000 miles)

= $0.20 per miles

Now for the 2021 year, it would be

= Miles driven in 2021 year × depreciation per miles

= 32,000 miles × $0.20

= $6,400

And, in 2022, it would be

= Miles driven in 2022 year × depreciation per miles

= 32,700 miles × $0.20

= $6,540