Cheshire Corporation purchases a machine for $125,000. It has an estimated salvage value of $10,000 and is expected to produce 100,000 units in its lifetime. During the first year of operation, it produced 15,500 units. To the nearest dollar, the depreciation for the first year under the units of production method will be: (Round intermediary calculations to the nearest cent, and the final answer
to the nearest dollar.)
A) $19,375.
B) $31,250.
C) $17,825.
D) $28,750.
C) $17,825
.Explanation: (cost - residual value)/useful life in units = per unit amount, first year units × per unit amount = first year depreciation.
Ex: ($125,000 - $10,000) / 100,000 = 1.15 × 15,500 = $17,825
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