On April 1, 2022, a machine was purchased for $33,600.It was estimated that it would have a $3,200 residual value at the end of its 5-year useful life.It was also estimated that the machine would be used for a total of 80,000 hours over the 5 years.If the actual number of machine hours used in 2022 was 12,000 hours and the company uses the units-of-production method of depreciation, the depreciation expense for 2022 would be
A)$5,040.
B)$4,560.
C)$3,780.
D)$3,420.

Question

Quizplus · Accepted Answer

The units-of-production method calculates depreciation based on the actual usage of the asset. The formula for calculating depreciation per unit is: (Cost - Residual Value) / Total Estimated Usage. In this case, ($33,600 - $3,200) / 80,000 hours = $0.38 per hour. For 12,000 hours of use in 2022, the depreciation expense is 12,000 hours * $0.38 = $4,560.

On April 1, 2022, a Machine Was Purchased for $33,600