A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It

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A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It

is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the amount of depreciation expense that should be recorded for the second year?
(A) $45,600.
(B) $81,600.
(C) $23,750.
(D) $48,133.
(E) $86,133.

Business

1 answer:

Scilla [3.8K] · Answer 1 · 2026-03-28T09:25:56+03:00

Option (B) is the right choice. Explanation: Calculating the depreciable basis involves subtracting residual value from cost, which here results in $190,000 - $10,000, giving us $180,000. The usage is identified as 75,000 bolts. The first-year figures indicate the book value starts at $190,000, while 15,000 bolts were created, translating the depreciation expense into 15,000 multiplied by $2.40, equal to $36,000. Subsequently, the ending book value becomes $190,000 minus $36,000, resulting in $154,000. For Year 2, using 19,000 units leads to a depreciation expense of $45,600. The concluding book value for Year 2 becomes $108,400, while accumulated depreciation for both years culminates at $81,600.