A company purchased machinery for $660,000 on May 1,2008. It is estimated that it will have a useful life of ten years,salvage value of $45,000, production of 350,000 units, and working hours of 60,000. During 2009 the company uses the machinery 3,050 hours, and the machinery produces 36,000 units.

The straight line is $660,000 -$45,000/10 = $61,500, but how do I set up the units of output for this problem?

To set up the units of output for this problem, we need to calculate the depreciation based on the units of production. This method is called the units of production depreciation method.

First, we need to determine the depreciation cost per unit of production. We can do this by subtracting the salvage value from the original cost and then dividing it by the total units of production over the estimated useful life.

Depreciation per unit of production = (Cost - Salvage Value) / Total Units of Production

In this case:
Cost = $660,000
Salvage Value = $45,000
Total Units of Production = 350,000

Depreciation per unit of production = ($660,000 - $45,000) / 350,000

Now, we can calculate the depreciation expense for a particular year by multiplying the depreciation per unit of production by the actual units produced in that year.

Depreciation Expense = Depreciation per unit of production × Actual Units Produced

In this case:
Actual Units Produced in 2009 = 36,000

Depreciation Expense in 2009 = Depreciation per unit of production × Actual Units Produced in 2009

So, to calculate the depreciation expense for 2009 using the units of production method, follow these steps:

1. Calculate Depreciation per unit of production: ($660,000 - $45,000) / 350,000
2. Multiply Depreciation per unit of production by Actual Units Produced in 2009: (Depreciation per unit of production) × 36,000

By following these steps, you can determine the depreciation expense for 2009 based on the units of production.