Answer:
Depreciable rate= $5 per hour
Annual depreciation= $20,000
Explanation:
Giving the following information:
A piece of machinery has a cost basis of $50,000. Its salvage value will be $5,000 after 9,000 hours of operation.
Using the units of production method, we need to use the following formula for each year:
Annual depreciation= [(original cost - salvage value)/useful life of production in hours]*hours operated
Depreciable rate= [(50,000 - 5,000) / 9,000= $5 per hour
Annual depreciation= 5*4,000= $20,000
