Question

Andrews Manufacturing Company purchased a new machine on July 1, 20x1. It was expected to produce 200,000 units of product over its estimated useful life of eight years. The total cost of the machine was ₱600,000, and the residual value was estimated to be ₱60,000. The actual units produced by the machine in 2001 and 2002 are shown below. 20x1: 16,000 units 20x2: 30,000 units Andrews reports on a calendar-year basis and uses the units-of-production method of depreciation. The amount of depreciation expense for this machine in 20x2 would be: a. ₱124,200 b. ₱90,000 c. ₱81,000 d. ₱74,520

          Andrews Manufacturing Company purchased a new machine on July 1, 20x1. It was expected to produce 200,000 units of product over its estimated useful life of eight years. The total cost of the machine was ₱600,000, and the residual value was estimated to be ₱60,000. The actual units produced by the machine in 2001 and 2002 are shown below.
20x1: 16,000 units
20x2: 30,000 units

Andrews reports on a calendar-year basis and uses the units-of-production method of depreciation. The amount of depreciation expense for this machine in 20x2 would be:
a. ₱124,200
b. ₱90,000
c. ₱81,000
d. ₱74,520

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Added by Lori R.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Madhur L

06/22/2023

Step 1

First, we need to find the depreciation per unit. To do this, we subtract the residual value from the total cost and divide by the total number of units expected to be produced over the machine's useful life. Depreciation per unit = (Total cost - Residual value) Show more…

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Andrews Manufacturing Company purchased a new machine on July 1, 20x1. It was expected to produce 200,000 units of product over its estimated useful life of eight years. The total cost of the machine was ₱600,000, and the residual value was estimated to be ₱60,000. The actual units produced by the machine in 2001 and 2002 are shown below. 20x1: 16,000 units 20x2: 30,000 units Andrews reports on a calendar-year basis and uses the units-of-production method of depreciation. The amount of depreciation expense for this machine in 20x2 would be: a. ₱124,200 b. ₱90,000 c. ₱81,000 d. ₱74,520

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