Chapter $8$

Exploration $8\mathrm{.}2$a $-$ Units of Production Method $(01)$

Goal: Learn how to calculate depreciation using the units$-$of$-$production method.

Instructions: You are given information about a plant and equipment asset. You must calculate depreciation of that asset using the units$-$of$-$production method.

Do not include the $ sign in your answers.

Your answers must be correct to exactly $2$ decimal places.

Do not include the, indicating thousands in your answers.

Do not round the cost per unit. $($Although it always works out to $2$ decimals.$)$

Velor Inc. purchased machinery costing $$31,500$ on January $1,2024.$ The machinery is expected to produce a total of $90,000$ units over its productive life. Its sales value at the end of its useful life is estimated to be $$3,600.$ The machinery actually produced $82,100$ units in $2024$; and $7,900$ units in $2025.$ Velor Inc.$\text{'}$s year$-$end is December $31.$ Calculate the following using the units$-$of$-$production method. For simplicity, assume that the machinery is depreciated as one unit; it will not be broken down into its parts and depreciated.

Compute Depreciation for the year $2024.$

Compute Depreciation for the year $2025.$