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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 accumulated depreciation at the end of the second year?
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 accumulated depreciation at the end of the second year? A) $36,000
B) $45,600
C) $81,600
D) $90,000
Final answer:Using the units-of-production method, the accumulated depreciation of the weaving machine at the end of the second year is $81,600.So the correct option is C $81,600.Explanation:The question pertains to calculating accumulated depreciation of a weaving machine at the end of the second year using the units-of-production method. The total depreciable amount is the cost of the machine minus its residual value, which is $190,000 - $10,000 = $180,000. To find the depreciation per unit, we divide the total depreciable amount by the estimated total production over the machine's useful life: $180,000 / 75,000 bolts = $2.40 per bolt.In the first year, 15,000 bolts were produced, resulting in a depreciation expense of 15,000 bolts × $2.40 per bolt = $36,000. In the second year, 19,000 bolts were produced, which equates to 19,000 bolts × $2.40 per bolt = $45,600. To find the accumulated depreciation at the end of the second year, we add the depreciation expenses of both years: $36,000 (first year) + $45,600 (second year) = $81,600.So the correct option is C $81,600.L...