Practice Units of Production Method - 18.5.4 | 18. Depreciation Accounting | Management 1 (Organizational Behaviour/Finance & Accounting)
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18.5.4 - Units of Production Method

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

Calculate the depreciation per unit for a machine that costs $10,000, has a residual value of $2,000, and an estimated total production of 20,000 units.

💡 Hint: Use the formula: (Cost - Residual value) / Estimated total production.

Question 2

Easy

What is the residual value if an asset costs $50,000 and its depreciated value after two years of production is $30,000?

💡 Hint: Residual value is what you have left after depreciation.

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Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What is the Units of Production Method used for?

  • Allocating expense based on usage
  • Fixed time period allocation
  • Only for intangible assets

💡 Hint: Consider output and usage pattern.

Question 2

True or False: The Units of Production Method is nonlinear and varies with usage.

  • True
  • False

💡 Hint: Reflect on how this method differs from methods like Straight-Line.

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Challenge Problems

Push your limits with challenges.

Question 1

A company has an asset worth $250,000 with a residual value of $50,000, expecting a total output of 1 million units. In the first quarter, they produced 300,000 units, what will be the depreciation expense for that quarter?

💡 Hint: Calculate depreciation per unit first before determining the total for the quarter.

Question 2

An asset costs $180,000, has a residual value of $20,000, and is expected to produce 1,000,000 units. If in the second year it produced 250,000 units, what is the current book value after two years of production?

💡 Hint: You need to calculate the total depreciation for the second year and subtract from the cost.

Challenge and get performance evaluation