Question

Marshall Company purchases a machine for $200,000. The machine has an estimated residual value of $80,000. The company expects the machine to produce four million units. The machine is used to make 440,000 units during the current period. If the units-of-production method is used, the depreciation expense for this period is:

Answer 1

Answer:

The depreciation expense for this period is: $13,200

Explanation:

The depreciation charge using units of production is calculated as follows :

Depreciation Expense = (Cost - Salvage Value) × (Period`s Production / Total Expected Production)

                                     = ($200,000 - $80,000) × 440,000 units / 4,000,000 units

                                     = $13,200

Conclusion:

The depreciation expense for this period is: $13,200