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 />Substituting these values into the formula gives:<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 expense for a given year is then calculated by multiplying the depreciation cost per unit by the number of units produced in that year.<br /><br />For Year 2, the actual units produced are 6,000 units. Therefore, the depreciation expense for Year 2 is:<br /><br />\[<br />\text{Depreciation Expense for Year 2} = 4 \times 6,000 = 24,000<br />\]<br /><br />Thus, the depreciation expense for the second year of its useful life using the units-of-production method is \(\$24,000\).