Mott Company Uses the Units-Of-Activity Method in Computing Depreciation

Multiple Choice

Mott Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $30,000 that will produce an estimated 100,000 units over its useful life. Estimated residual value at the end of its useful life is $2,500. What is the depreciation cost per unit (rounded to the nearest cent) ?

A) $2.75
B) $3.00
C) $.28
D) $.30