A Company Purchased a Weaving Machine for $190,000

question 82

Multiple Choice

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 depreciation expense that should be recorded for the second year?

• A)$48,133.
• B)$45,600.
• C)$22,500.
• D)$23,750.
• E)$81,600.

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Definitions:

Payback Method

A capital budgeting method that calculates the time needed to recoup the initial investment in a project, based on the project's expected cash flows.

Discounted Cash Flow

A financial analysis method that estimates the value of an investment based on its future cash flows, adjusted for time and risk.

Cash Inflows

Money received by a business from its operations, investments, or financing activities.

Investment Outflows

Money expended on acquiring or investing in assets with the expectation of generating future returns.