Calculate depreciable cost per hour under units-of-activity

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Question - In recent years, Monty Company has purchased three machines. Because of frequent employee turnover in the accounting department, a different accountant was in charge of selecting the depreciation method for each machine, and various methods have been used. Information concerning the machines is summarized in the table below.

Machine

Acquired

Cost

Salvage
Value

Useful Life
(in years)

Depreciation
Method

1

Jan. 1, 2020

$ 98,600

$ 15,000

8

Straight-line

2

July 1, 2021

90,500

10,500

5

Declining-balance

3

Nov. 1, 2021

77,500

7,500

6

Units-of-activity

For the declining-balance method, Monty Company uses the double-declining rate. For the units-of-activity method, total machine hours are expected to be 35,000. Actual hours of use in the first 3 years were 2021, 900; 2022, 5,000; and 2023, 7,000.

Required - For Machine #3, calculate depreciable cost per hour under units-of-activity method.

Reference no: EM133177763

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