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On January​ 1, 2024, Tyson Manufacturing Company purchased a machine for $41,100,000. ​Tyson's management expects to use the machine for 28,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $40,000. The machine was used for 4,000 hours in 2024 and 5,500 hours in 2025. What is the depreciation expense for 2024 if the company uses the units−of−production method of​ depreciation? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

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facundobuzzetti

Answer:

Annual depreciation= $5,865,714.29

Explanation:

Giving the following information:

Purchase price= $41,100,000

Salvage value= $40,000

Useful life in hours= 28,000

To calculate the depreciation expense for 2024, we need to use the following formula:

Annual depreciation= [(original cost - salvage value)/useful life of production in hours]*hours operated

Annual depreciation= [(41,100,000 - 40,000) / 28,000]*4,000

Annual depreciation= $5,865,714.29

chilljain33

The correct depreciation expense will be 5865714.28 dollars. This will be achieved only under the units of production depreciation method. In case of any other methods the values obtained will be different.

The units of production method of depreciation is obtained by calculated by dividing the machinery's net cost by its expected lifetime production and expense is calculated using the values obtained from this formula.

  • The annual depreciation expense will be determined only after calculation of depreciation under the method that follows the units of production method. The values have been given to us in the queries itself.

  • The net cost of machinery is 41,100,000 expected life of machine is 28000 hours and the salvage value is 40000 at the end of 6 years. In this year the machine was used by Tyson Co. for 4000 hours.

  • The values will be obtained by putting values to the formula of Depreciation under units of production method as

[tex]Depreciation\ for\ 2024=\frac{Cost\ of\ purchase- salvage\ value}{total\ expected\ life}[/tex]

  • Putting the values in the formula we get

[tex]depreciation\ for\ 2024=\frac{41100000-40000}{28000}[/tex]

[tex]depreciation\ for\ 2024=\frac{41060000}{28000}[/tex]

[tex]depreciation\ for\ 2024= 1466.42[/tex]

  • The value that has been obtained will now be put up in the formula of depreciation expense.

[tex]Depreciation\ expense\ for\ 2024= 1466.42 *4000[/tex]

[tex]Depreciation\ expense\ for\ 2024= 5865714.28[/tex]

  • So, it is clear that the depreciation expense the firm has made is $5865714.28

Hence, the correct choice for depreciation of Tyson Manufacturing company for the year 2024 will be $5865714.28

To know more about depreciation, click on the link below.

https://brainly.com/question/3023490

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