The
Widget Tool and Die Company buys a $600,000 stamping machine that has an
estimated residual value of $120,000. The company expects the machine to
produce eight million units. It makes 520,000 units during the current
period.
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rev: 03-02-2011
5.
award:
10 out of
10.00 points
10 out of
10.00 points
If the units-of-production method
is used, the depreciation rate is:
|
rev: 03-02-2011
|
$0.92 per unit.
|
|
$0.23 per unit.
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$0.06 per unit.
|
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$1.15 per unit.
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Depreciation rate per unit = (Cost
− Residual Value) × (1 ÷ Estimated Total Production)
|
$0.06 = $600,000 − $120,000 × 1 ÷
8,000,000
|
6.
award:
10 out of
10.00 points
10 out of
10.00 points
If the units-of-production method
is used, the depreciation expense for this period is:
|
rev: 03-02-2011
|
$520,000.
|
|
$39,000.
|
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$400,000.
|
|
$31,200.
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$0.06
(deprecation rate) × 520,000 (units current period) = $31,200
|
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