[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 $84,600. The machine's useful life is estimated at 20 years, or 393,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 33,300 units of product. etermine the machine's second-year depreciation using the units-of-production method.
[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 $84,600. The machine's useful life is estimated at 20 years, or 393,000 units of product, with a $6,000 salvage value. During its second year, the machine produces 33,300 units of product. etermine the machine's second-year depreciation using the units-of-production method.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Practice Pack
Can someone tell me what the Annual production (units) and the
![**Depreciation Calculation using Units-of-Production Method**
**Instructional Scenario:**
*Given Information:*
- Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $84,600.
- The machine's useful life is estimated at 20 years, or 393,000 units of product, with a $6,000 salvage value.
- During its second year, the machine produces 33,300 units of product.
**Objective:**
Determine the machine’s second-year depreciation using the units-of-production method.
**Depreciation Calculation Table:**
| **Units-of-production Depreciation** |
| ------- |
| Choose Numerator: / |
| Choose Denominator: = Annual Depreciation Expense |
| / = Depreciation expense per unit |
| / = |
| **Year** | **Annual Production (units)** | **Depreciation Expense** |
| --- | --- | --- |
| 2 | \[ \] | \[ \] |
**Explanation of the Table:**
1. **Choose Numerator / Choose Denominator = Annual Depreciation Expense:**
- Numerator: This is where the initial machine cost minus the salvage value will be recorded.
- Denominator: The estimated total units over the machine’s useful lifetime.
2. The Depreciation expense per unit is calculated by dividing the above values.
3. Using the Annual Production (units), the Depreciation Expense for the year is determined.
**Example Calculation Summary:**
The given machine depreciation expense calculation involves determining the expense per unit first, then calculating the total depreciation for the annual units produced.
**Steps:**
1. Calculate the total depreciable amount:
\[ \text{Cost} - \text{Salvage Value} = \$84,600 - \$6,000 = \$78,600 \]
2. Determine the depreciation expense per unit:
\[ \text{Depreciable Amount} / \text{Total Units} = \$78,600 / 393,000 \text{ units} = \$0.20 \text{ per unit} \]
3. Calculate the second year’s depreciation:
\[ \text{Annual Production (units)} \times \text{Depreciation Expense per Unit} = 33,300 \text{ units} \times \$0.20 \text{ per unit}](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc87ddbd0-2e96-4ff2-b892-078e8a47d877%2F5deccf4e-daab-4a13-8cc4-bb6ebbe85b6f%2F7ausrd_processed.png&w=3840&q=75)
Transcribed Image Text:**Depreciation Calculation using Units-of-Production Method**
**Instructional Scenario:**
*Given Information:*
- Ramirez Company installs a computerized manufacturing machine in its factory at the beginning of the year at a cost of $84,600.
- The machine's useful life is estimated at 20 years, or 393,000 units of product, with a $6,000 salvage value.
- During its second year, the machine produces 33,300 units of product.
**Objective:**
Determine the machine’s second-year depreciation using the units-of-production method.
**Depreciation Calculation Table:**
| **Units-of-production Depreciation** |
| ------- |
| Choose Numerator: / |
| Choose Denominator: = Annual Depreciation Expense |
| / = Depreciation expense per unit |
| / = |
| **Year** | **Annual Production (units)** | **Depreciation Expense** |
| --- | --- | --- |
| 2 | \[ \] | \[ \] |
**Explanation of the Table:**
1. **Choose Numerator / Choose Denominator = Annual Depreciation Expense:**
- Numerator: This is where the initial machine cost minus the salvage value will be recorded.
- Denominator: The estimated total units over the machine’s useful lifetime.
2. The Depreciation expense per unit is calculated by dividing the above values.
3. Using the Annual Production (units), the Depreciation Expense for the year is determined.
**Example Calculation Summary:**
The given machine depreciation expense calculation involves determining the expense per unit first, then calculating the total depreciation for the annual units produced.
**Steps:**
1. Calculate the total depreciable amount:
\[ \text{Cost} - \text{Salvage Value} = \$84,600 - \$6,000 = \$78,600 \]
2. Determine the depreciation expense per unit:
\[ \text{Depreciable Amount} / \text{Total Units} = \$78,600 / 393,000 \text{ units} = \$0.20 \text{ per unit} \]
3. Calculate the second year’s depreciation:
\[ \text{Annual Production (units)} \times \text{Depreciation Expense per Unit} = 33,300 \text{ units} \times \$0.20 \text{ per unit}
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Includes step-by-step video
Trending now
This is a popular solution!
Learn your way
Includes step-by-step video
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education