ShadyZ Corporation uses the unit-of-production method to estimate depreciation.A new asset is purchased for $18,000 that will produce an estimated 100,000 units over its useful life.Estimated residual value is $2,000.What is the depreciation rate per unit?
A)$1.60
B)$1.80
C)$0.16
D)$0.18

Question

Quizplus · Accepted Answer

Depreciable cost = cost of asset - estimated residual value = $18,000 - $2,000 = $16,000
Depreciation rate per unit = depreciable cost/estimated total units of production = $16,000/100,000 units = $0.16/unit

ShadyZ Corporation Uses the Unit-Of-Production Method to Estimate Depreciation