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 final year of its useful life using the units-of-production method? 24,000 33,750 12,000 4,000 164,000

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 cost per unit is \( \$4 \).<br /><br />Next, we calculate the depreciation expense for each year by multiplying the actual units produced in that year by the depreciation cost per unit.<br /><br />For Year 8, the actual units produced are 3,000 units. Therefore, the depreciation expense for Year 8 is:<br /><br />\[<br />\text{Depreciation Expense for Year 8} = 3,000 \times 4 = 12,000<br />\]<br /><br />Thus, the depreciation expense for the final year of its useful life using the units-of-production method is \(\$12,000\). <br /><br />The correct answer is: \(\$12,000\).