Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $136,000. The machine's useful life is estimated to be 10 years, or 120,000 units of product, with a $4,000 salvage value. During its second year, the machine produces 9,600 units of product. Determine the machines' second year depreciation under the units-of-production method. (Do not round intermediate calculations.)

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andromache andromache · Answer 1 · 2020-04-23T16:23:24+02:00

Answer:

$10,560

Explanation:

For computing the depreciation expense for the second year first we have to find out the depreciation per unit which is shown below:

= (Original cost - salvage value) ÷ (estimated production units)

= ($136,000 - $4,000) ÷ (120,000 units)

= ($132,000) ÷ (120,000 units)

= $1.1 per unit

Now for the second year, the depreciation expense would be

= Production units in second year × depreciation per unit

= 9,600 units × $1.1

= $10,560