Vickers Ltd.uses the units-of-production depreciation method.A new asset is purchased for $27,000 that will produce an estimated 125,000 units over its useful life.Estimated residual value is $2,000.What is the depreciable cost per unit?
A)$2.20
B)$2.16
C)$0.22
D)$0.20

Question

Quizplus · Accepted Answer

The depreciable cost per unit is calculated by subtracting the residual value from the purchase price and then dividing by the total estimated units. ($27,000 - $2,000) / 125,000 units = $0.20 per unit.