Units of Production Method The cost of the asset 30000000 Th

Units of Production Method

The cost of the asset: $300,000.00
The salvage value: $10,000.00
The life of the asset in production units: 11,000 units

Calculate the Depreciation per Unit to the nearest dollar, then determine the Book Value at the End of 2,200 units.

Solution

Units of production depreciation

= (Cost of assets – salvage value)/ total number of units to be produced

= ($ 300,000 - $ 10,000)/11,000

= $ 290,000/11,000 = $ 26.3636 or $ 26.3636

Depreciation per unit is $ 26.36

Book value at the end of 2,200 units = Cost of assets – depreciation expense

                                                          = $ 300,000 – ($ 26.3636 x 2,200)

                                                           = $ 300,000 - $ 58,000

                                                           = $ 242,000