Required information [The following information applies to the questions displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500. The machine's useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 32,500 units of product. Determine the machine's second-year depreciation using the units-of-production method. Units-of-production Depreciation Choose Numerator: Choose Denominator: Annual Depreciation Expense Cost minus salvage Estimated useful life (years) Depreciation expense per unit %3D $ 38,500 / 10 $ 3,850.00 %3D Year Annual Production (units) Depreciation Expense Year 2
Required information [The following information applies to the questions displayed below.] Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500. The machine's useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 32,500 units of product. Determine the machine's second-year depreciation using the units-of-production method. Units-of-production Depreciation Choose Numerator: Choose Denominator: Annual Depreciation Expense Cost minus salvage Estimated useful life (years) Depreciation expense per unit %3D $ 38,500 / 10 $ 3,850.00 %3D Year Annual Production (units) Depreciation Expense Year 2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![### Required Information
**[The following information applies to the questions displayed below.]**
Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500. The machine's useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 32,500 units of product.
Determine the machine's second-year depreciation using the units-of-production method.
---
### Explanation of the Units-of-Production Depreciation Table
The table below details the calculation of depreciation expense using the units-of-production method.
| Units-of-production Depreciation |
|----------------------------------|
| **Choose Numerator:** |
| Cost minus salvage |
| **Choose Denominator:** |
| Estimated useful life (years) |
| |
| **Depreciation Expense per Unit**|
| \( \$43,500 - \$5,000 \) / 385,000 units = \$0.10 per unit |
**Calculation Details:**
1. **Numerator (Cost minus salvage):**
- \$43,500 - \$5,000 = \$38,500
2. **Denominator (Estimated useful life):**
- 385,000 units
3. **Depreciation Expense per Unit:**
- \$38,500 / 385,000 units = \$0.10 per unit
The annual depreciation expense for Year 2 is calculated by multiplying the production units by the depreciation expense per unit:
- **Annual Production in Year 2:**
- 32,500 units
- **Depreciation Expense:**
- 32,500 units * \$0.10 per unit = \$3,250.00
The table shows the allocation and calculation of the annual depreciation expense which aids in understanding the use of the units-of-production depreciation method to assess asset value over time based on production output.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F45f3e0a4-3f21-4962-8ad5-de454383f96a%2F1ad56cf9-4d33-4ce3-962e-f99e674cf56b%2Fgnwhlsh_processed.png&w=3840&q=75)
Transcribed Image Text:### Required Information
**[The following information applies to the questions displayed below.]**
Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $43,500. The machine's useful life is estimated at 10 years, or 385,000 units of product, with a $5,000 salvage value. During its second year, the machine produces 32,500 units of product.
Determine the machine's second-year depreciation using the units-of-production method.
---
### Explanation of the Units-of-Production Depreciation Table
The table below details the calculation of depreciation expense using the units-of-production method.
| Units-of-production Depreciation |
|----------------------------------|
| **Choose Numerator:** |
| Cost minus salvage |
| **Choose Denominator:** |
| Estimated useful life (years) |
| |
| **Depreciation Expense per Unit**|
| \( \$43,500 - \$5,000 \) / 385,000 units = \$0.10 per unit |
**Calculation Details:**
1. **Numerator (Cost minus salvage):**
- \$43,500 - \$5,000 = \$38,500
2. **Denominator (Estimated useful life):**
- 385,000 units
3. **Depreciation Expense per Unit:**
- \$38,500 / 385,000 units = \$0.10 per unit
The annual depreciation expense for Year 2 is calculated by multiplying the production units by the depreciation expense per unit:
- **Annual Production in Year 2:**
- 32,500 units
- **Depreciation Expense:**
- 32,500 units * \$0.10 per unit = \$3,250.00
The table shows the allocation and calculation of the annual depreciation expense which aids in understanding the use of the units-of-production depreciation method to assess asset value over time based on production output.
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