Whippet bus lines uses the units-of-activity method in depreciating its buses. one bus was purchased on january 1, 2017, at a cost of $100,000. over its 4-year useful life, the bus is expected to be driven 160,000 miles. salvage value is expected to be $8,000.

compute the depreciation cost per unit. (round answer to 3 decimal places, e. g. 6.251)

depreciation cost per unit
$

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prepare a depreciation schedule assuming actual mileage was: 2017, 40,000; 2018, 52,000; 2019, 41,000; and 2020, 27,000. (round depreciation cost per unit to 3 decimal places, e. g. 0.125 and other answers to 0 decimal places, e. g. 125)

computation
end of year
years
units of activity
×
depreciation cost/unit
=
annual depreciation expense
accumulated depreciation
book value
2017

Instructions are listed below.

Explanation:

Giving the following information:

Whippet Bus Lines uses the units-of-activity method in depreciating its buses. One bus was purchased on January 1, 2017, for $100,000. Over its 4-year useful life, the bus is expected to be driven 160,000 miles. Salvage value is expected to be $8,000.

Compute the depreciation cost per unit.

Depreciation per unit= (100,000 - 8,000)/160,000= $0.575 per mile.

Prepare a depreciation schedule assuming actual mileage was: 2017, 40,000; 2018, 52,000; 2019, 41,000; and 2020, 27,000.

Annual depreciation= [(original cost - salvage value)/useful life of production in units]*units produced

2017= 0.575*40,000= 23,000

2018= 0.575*52,000= 29,900

2019= 0.575*41,000= 23,575

2020= 0.575*27,000= 15,525

d. the economy will face inflation.