Question

If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will______
a. be constant.
b. vary with unit sales.
c. vary with sales revenue.
d. vary with production.

Answer 1

d. vary with production.

Answer 2

Answer:

The correct answer is letter "D": vary with production.

Explanation:

The Unit of Production Method is is a depreciation method that is more useful when the asset's value is related to the number of units that it helps to produce than when talking about the time the asset was operational. In other words, this method depreciates more in years when their contribution to production is higher and the depreciation decreases when the asset's life is coming to an end.