Question

marshall company purchases a machine for $1,040,000. the machine has an estimated residual value of $100,000. the company expects the machine to produce two million units. the machine is used to make 600,000 units during the current period. if the units-of-production method is used, the depreciation rate is:

Answer 1

The depreciation rate is always written in a percentage and calculated through a numeral value. Depreciation refers to the decrease in value of a asset over a period of time.

Depreciation rate: Cost of goods sold - Residual Value/ Total units             expected to be produced * Actual units produced

Depreciation rate: 1,040,000 - 100,000/ 200,000 * 600,000

= 2,820,000 or 2.82%

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