Assume That Bybee Uses the Units of Production Method When

question 24

Multiple Choice

Assume that Bybee uses the units of production method when depreciating its equipment. Bybee estimates that the purchased equipment will produce 1,000,000 units over its 5-year useful life and has salvage value of $17,000. Bybee produced 265,000 units with the equipment by the end of the first year of purchase. Which amount below is closest to the amount Bybee will record for depreciation expense for the equipment in the first year?

• A)$96,725
• B)$62,600
• C)$78,440
• D)$82,945

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Definitions:

Net Operating Income

The total profit of a company after subtracting operating expenses but before interest and taxes.

Operating Income

Income generated from regular business operations, excluding any investment income, taxes, or extraordinary items.

Selling Price

The amount of money charged for a product or service.

Net Operating Income

An accounting term that represents the revenue minus the cost of goods sold and operating expenses, excluding taxes and interest.