Use the units of production method to find depreciation for the following: Cost Salvage Value Estimated Life Usage $20000 $2000 40,000 h 12,480 h $70,000 $7000 100,000 units 70,500 units $18500 2300 75,000 mi 55,600 mi

Use the units of production method to find depreciation for the following: Cost Salvage Value Estimated Life Usage $20000 $2000 40,000 h 12,480 h $70,000 $7000 100,000 units 70,500 units $18500 2300 75,000 mi 55,600 mi

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

Use the units of production method to find depreciation for the following:

Cost	Salvage Value	Estimated Life	Usage
$20000	$2000	40,000 h	12,480 h
$70,000	$7000	100,000 units	70,500 units
$18500	2300	75,000 mi	55,600 mi

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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