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Calculate depreciation using productin units method
- 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
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