Fields Company purchased equipment on January 1 for 180,000 This system has a useful life of 8 years and a salvage value of 20,000 The company estimates that the equipment will produce 40,000 units over its 8-year useful life Actual units produced are: Year 1 - 4,000 units;Year 2-6 ,000 units; Year 3-8,000 units; Year 4-5,000 units; Year 5 -4,000 units; Year 6-5,000 units; Year 7 -7,000 units; Year 8 - 3 ,000 units. What would be the depreciation expense for the second year of its useful life using the units-of-production method? 16,000 45,000 33,750 24,000 20,000

To calculate the depreciation expense using the units-of-production method, we first need to determine the depreciation cost per unit. The formula for this is:<br /><br />\[<br />\text{Depreciation Cost per Unit} = \frac{\text{Cost of Equipment} - \text{Salvage Value}}{\text{Total Estimated Units}}<br />\]<br /><br />Given:<br />- Cost of Equipment = \( \$180,000 \)<br />- Salvage Value = \( \$20,000 \)<br />- Total Estimated Units = 40,000 units<br /><br />Substitute these values into the formula:<br /><br />\[<br />\text{Depreciation Cost per Unit} = \frac{180,000 - 20,000}{40,000} = \frac{160,000}{40,000} = 4<br />\]<br /><br />The depreciation cost per unit is \( \$4 \).<br /><br />Next, calculate the depreciation expense for the second year by multiplying the depreciation cost per unit by the actual units produced in the second year:<br /><br />\[<br />\text{Depreciation Expense for Year 2} = \text{Depreciation Cost per Unit} \times \text{Units Produced in Year 2}<br />\]<br /><br />\[<br />\text{Depreciation Expense for Year 2} = 4 \times 6,000 = 24,000<br />\]<br /><br />Therefore, the depreciation expense for the second year using the units-of-production method is \( \$24,000 \).