A company paid 66 000 for a machine and was depreciating
A company paid $66,000 for a machine and was depreciating it by the units-of-production method. The machine was expected to produce a total of 150,000 units of product, and to have a residual value of $6,000. During the first two years of use, the machine produced 45,000 units. At the beginning of the machine’s third year of life, its estimated lifetime production was revised from 150,000 to 120,000 units; its estimated residual value was unchanged.
Required:
Calculate the amount of depreciation that should be charged during the third year of the machine’s life if 25,000 units are produced that year.
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