Question

Cheshire Corporation purchases a machine for $160.000. It has an estimated salvage value of $20,000 and is expected to produce 50.000 units in some During the first year of operation depreciation for the first your under the units of production method wil be:Round immediary cautions to the neareston and the final anwer to the nearest dar) produced 15.500 To ne nared OA 140,000 OBS43.400 OC. $49,600 OD $35,000

Answer 1

	CALCULATION OF THE DEPRECIATION PER UNIT
	Purchase Cost of Machine	$                  1,60,000
	Less: Salvage Value	$                      20,000
	Net Value for Depreciation	$                  1,40,000
	Expected to produce Units	50,000	Units
	Depreciation per Unit =	$                          2.80	Per Units
	($ 140,000 / 50,000 Units)
	Depreciation For the First Year
	Number of Units Productuion	15,500	Units
	Depreciation Per Units	$                          2.80	Per Units
	Depreciation = (Units Produced * Deprciation Per Unit)	$                      43,400
	Answer = Option 2 = $ 43,400