Question

A machine costing $211,600 with a four-year life and an estimated $16,000 salvage value is installed in Luther Company’s factory on January 1. The factory manager estimates the machine will produce 489,000 units of product during its life. It actually produces the following units: 121,600 in Year 1, 123,200 in Year 2, 121,500 in Year 3, 132,700 in Year 4. The total number of units produced by the end of Year 4 exceeds the original estimate—this difference was not predicted. (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. (

Round your per unit depreciation to 2 decimal places. Round your answers to the nearest whole dollar.)

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Units of production.

Units of Production
Year	Units	Depreciable Units	Depreciation per unit	Depreciation Expense
1	121,600		$0.40
2	123,200		$0.40
3	121,500		$0.40
4	132,700		$0.40
Total				$0

DDB Depreciation for the PeriodEnd of PeriodYearBeginning of Period Book ValueDepreciation RateDepreciation ExpenseAccumulated DepreciationBook Value1%$02%03%04%0Total$0

Answer 1

a) Depreciation expense per unit = (211600-16000)/489000 = 0.40

Compute depreciation for each year (and total depreciation of all years combined) for the machine under the Units of production.

	Units of Production Year Units Depreciable Units Depreciation per unit Depreciation Expense 1 121,600 121600 $0.40 48640 2 123,200 123200 $0.40 49280 3 121,500 121500 $0.40 48600 4 132,700 122700 $0.40 49080 Total $195600

b) Depreciation expense : DDB

	Depreciation for the Period			End of Period
Year	Beginning of Period Book Value	Depreciation rate	Depreciation expense	Accumulated depreciation	Book value
1	211600	50%	105800	105800	105800
2	105800	50%	52900	158700	52900
3	52900	50%	26450	185150	26450
4	26450	50%	10450	195600	16000
Total			195600