This Question 13 of 15 (0 complete)his Quiz: 20 On January 1, 2018, Tyson Manufa

Question

This Question 13 of 15 (0 complete)his Quiz: 20 On January 1, 2018, Tyson Manufacturing Corporation purchased a machine for $40,000,000. Tyson's management expects to use the machine for 33,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $47,000. The machine was used for 4,000 hours in 2018 and 5,500 hours in 2019. What is the depreciation expense for 2018 if the corporation uses the units-of-production method of depreciation? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.) O A. $13,333,333 O B. $4,842,800 O C. $6,658,850 O D. $4,848,480

Explanation / Answer

Depreciation per unit for the machine = (Cost of the machine - Residual value of the machine) / Useful life of the machine in units [Hours in this case]

So, Depreciation per unit of the machine = ($40,000,000- $47,000) / 33,000 hours = 1,210.70

Hence, according to units-of- production method, Depreciation for the year 2018 = (Depreciation per unit for machine * Number of Hours the machine was used for during the year)

Therefore, Depreciation for the year 2018 = 1,210.70 * 4,000 hours = $4,842,800

ANSWER = B. The depreciation for the year 2018 on the machinery = $4,842,800.

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