18.5.4 - Units of Production Method
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Practice Questions
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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.
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
Quick quizzes to reinforce your learning
What is the Units of Production Method used for?
💡 Hint: Consider output and usage pattern.
True or False: The Units of Production Method is nonlinear and varies with usage.
💡 Hint: Reflect on how this method differs from methods like Straight-Line.
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Challenge Problems
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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.
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.
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