Calculate depreciation using productin units method

Finance ManagementAccountingAcademic Content

  • Processes 150 kgs of coffee
  • Served 1350 customers

Solution

The solution is given below −

Cost of the machine = $ 75000

Salvage value = $ 3000

Depreciable value = cost of machine – salvage value

       = (75000 – 3000)

       = $ 72000

  • Processes 150 Kgs of coffee

Depreciation = depreciable value * (number of units processed/total number of process units)

       = 72000 * (150/700)

       = $ 15428.57

  • Served 1350 customers

Depreciation = depreciation amount * (number of customers served/total number of customers)

       = 72000 * (1350/17500)

      = $ 5554.29

raja
Published on 13-Aug-2020 14:49:36
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