Answer:
The depreciation cost per year is:
Year 1: $16,800
Year 2: $31,200
Year 3: $27,600
Year 4: $15,120
Explanation:
To calculate the depreciation cost for the equipment based on hours used, we must determine the cost per hour:
cost per hour = (purchase cost - salvage value) / expected useful life
cost per hour = ($93,420 - $2,700) / 7,560 hours = $90,720 / 7,560 hours = $12 per hour
The depreciation cost per year is:
Year 1: 1,400 hours x $12 per hour = $16,800
Year 2: 2,600 hours x $12 per hour = $31,200
Year 3: 2,300 hours x $12 per hour = $27,600
Year 4: 1,260 hours x $12 per hour = $15,120
