A machine costs Rs. 260,000, has a residual value of Rs. 20,000 and is expected to produce 120,000 units. If it produces 30,000 units in the first year, what depreciation is charged under the units-of-production method?
Correct answer: A. Rs. 60,000
- A. Rs. 60,000
- B. Rs. 50,000
- C. Rs. 65,000
- D. Rs. 80,000
Explanation
Depreciable cost is Rs. 240,000, calculated as Rs. 260,000 less Rs. 20,000. Depreciation per unit is Rs. 2, so production of 30,000 units gives depreciation of Rs. 60,000.
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