Question

Yello Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2019, at a cost of $205,860. Over its 4-year useful life, the bus is expected to be driven 141,400 miles. Salvage value is expected to be $7,900. Compute the depreciation cost per unit.

Answer 1

Answer:

The depreciation cost of the bus per unit is $ 1.4 which is purchased on January 1, 2019.

Explanation:

The depreciation cost per unit is computed as:

Depreciable asset = Cost - Salvage Value

                               = $205,860 - $7,900

                               = $197,960

Depreciation per unit = Depreciable asset /Useful life expected value

                                    = $197,960 / 141,400

                                    = $1.4

Therefore, the per unit cost is $1.4