On January 1, Year 1, Milton Manufacturing Company Purchased Equipment

Multiple Choice

On January 1, Year 1, Milton Manufacturing Company purchased equipment with a list price of $32,000. A total of $3,000 was paid for installation and testing. During the first year, Milton paid $4,500 for insurance on the equipment and another $650 for routine maintenance and repairs. Milton uses the units-of-production method of depreciation. Useful life is estimated at 100,000 units, and estimated salvage value is $6,000. During Year 1, the equipment produced 12,000 units. What is the amount of depreciation for Year 1?

A) $3,480
B) $4,020
C) $4,098
D) $4,740