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Answer :
To calculate the depreciation expense for each year using the units-of-production method, we need to determine the depreciation rate per hour and then multiply it by the actual number of hours of usage in each year.
Step 1: Calculate the depreciation rate per hour.
Depreciation Rate per Hour = (Cost of Equipment - Residual Value) / Total Estimated Operating Hours
Depreciation Rate per Hour = ($61,290 - $1,890) / 5,940 hours
Depreciation Rate per Hour = $59,400 / 5,940 hours
Depreciation Rate per Hour ≈ $10.00 per hour
Step 2: Calculate the depreciation expense for each year.
Year 1: Depreciation Expense = Depreciation Rate per Hour * Actual Hours in Year 1
Depreciation Expense = $10.00 per hour * 1,100 hours
Depreciation Expense = $11,000
Year 2: Depreciation Expense = Depreciation Rate per Hour * Actual Hours in Year 2
Depreciation Expense = $10.00 per hour * 2,100 hours
Depreciation Expense = $21,000
Year 3: Depreciation Expense = Depreciation Rate per Hour * Actual Hours in Year 3
Depreciation Expense = $10.00 per hour * 1,800 hours
Depreciation Expense = $18,000
Year 4: Depreciation Expense = Depreciation Rate per Hour * Actual Hours in Year 4
Depreciation Expense = $10.00 per hour * 940 hours
Depreciation Expense = $9,400
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