Heatherbrae Co. uses the units-of-production method to estimate depreciation. The company purchased a new machine for $48,000 that will produce an estimated 330,000 units over its useful life. The estimated residual value of the machine is $4,000. What is the depreciation rate per unit?

Depreciation per unit = 0.133 (Approx)

Explanation:

Given:

Cost of machine = $48,000

Total unit produced = 330,000 units

Residual value of the machine = $4,000.

Depreciation rate per unit = ?

Computation of depreciation rate per unit:

Depreciation per unit = (Cost of machine - Salvage value) / Total unit produced

Depreciation per unit = ($48,000 - $4,000) / 330,000 units

Depreciation per unit = ($44,000) / 330,000 units

Depreciation per unit = 0.133 (Approx)