A machine costing $215,800 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 492,000 units of product during its life. It actually produces the following units: 122,300 in Year 1, 123,700 in Year 2, 121,200 in Year 3, 134,800 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate-this difference was not predicted. Note: The machine cannot be depreciated below its estimated salvage value. Required: Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method. Note: Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar. Complete this question by entering your answers in the tabs below. Straight Line Units of Production DDB Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Double- declining-balance. DDB Depreciation for the Period End of Period Beginning of Depreciation Year Period Book Rate Depreciation Expense Accumulated Depreciation Book Value Value Year 1 Year 2 % % Year 3 Year 4 Total % % < Units of Production DDB >
A machine costing $215,800 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company's factory on January 1. The factory manager estimates the machine will produce 492,000 units of product during its life. It actually produces the following units: 122,300 in Year 1, 123,700 in Year 2, 121,200 in Year 3, 134,800 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate-this difference was not predicted. Note: The machine cannot be depreciated below its estimated salvage value. Required: Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method. Note: Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar. Complete this question by entering your answers in the tabs below. Straight Line Units of Production DDB Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Double- declining-balance. DDB Depreciation for the Period End of Period Beginning of Depreciation Year Period Book Rate Depreciation Expense Accumulated Depreciation Book Value Value Year 1 Year 2 % % Year 3 Year 4 Total % % < Units of Production DDB >
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 13E
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Transcribed Image Text:A machine costing $215,800 with a four-year life and an estimated $19,000 salvage value is installed in Luther Company's factory on
January 1. The factory manager estimates the machine will produce 492,000 units of product during its life. It actually produces the
following units: 122,300 in Year 1, 123,700 in Year 2, 121,200 in Year 3, 134,800 in Year 4. The total number of units produced by the end
of Year 4 exceeds the original estimate-this difference was not predicted. Note: The machine cannot be depreciated below its
estimated salvage value.
Required:
Compute depreciation for each year (and total depreciation of all years combined) for the machine under each depreciation method.
Note: Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar.
Complete this question by entering your answers in the tabs below.
Straight Line
Units of
Production
DDB
Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Double-
declining-balance.
DDB Depreciation for the Period
End of Period
Beginning of
Depreciation
Year
Period Book
Rate
Depreciation
Expense
Accumulated
Depreciation
Book Value
Value
Year 1
Year 2
%
%
Year 3
Year 4
Total
%
%
< Units of Production
DDB >
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Step 1: Introduction to Depreciation
VIEWStep 2: Computation of Depreciation foe each year using Straight line Depreciation method
VIEWStep 3: Computation of Depreciation for each year using Units of production method
VIEWStep 4: Computation of Depreciation for each year using Double declining method
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