Swifty Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $41000 that will produce an estimated 110000 units over its useful life. Estimated salvage value at the end of its useful life is $3600. What is the depreciation cost per unit?

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Business

Boomhauer

5 July, 11:19

Swifty Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $41000 that will produce an estimated 110000 units over its useful life. Estimated salvage value at the end of its useful life is $3600. What is the depreciation cost per unit?

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Alvaro Brock · Answer 1

depreciation rate per unit $0.34

Explanation:

To calculate the depreciation cost per unit we divide the amount subject to depreciation by the estimated untis production over its useful life:

depreciable amount:

$41,000 - $3,600 = $ 37,400

depreciation rate:

$37,400 / 110,000 units = $0.34