Mott Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $24,000 that will produce an estimated 100,000 units over its useful life. Estimated salvage value at the end of its useful life is $2,000. What is the depreciation cost per unit?
A) $2.20
B) $2.40
C) $.22
D) $.24

Question

Quizplus · Accepted Answer

Depreciation cost per unit = (Cost of asset - Salvage value) / Estimated units of activity= ($24,000 - $2,000) / 100,000 units= $22,000 / 100,000 units= $0.22 per unit

Mott Company Uses the Units-Of-Activity Method in Computing Depreciation