Question

Cost of production definition in calculation of unit

Answer 1

The unit of production method is a method of depreciation the value of an asset over time. It becomes useful when an asset's value is more closely related to the number of units it produces than the number of years it is in use.

❤️Units of production depreciation❤️

1.Estimate the total number of hours of usage of the asset, or the total number of units to be produced by it over its useful life.

2.Subtract any estimated salvage value from the capitalized cost of the asset, and divide the total estimated usage or production from this net depreciable cost.