Through unit-of-output method, the formula for depreciation is determined as
Depreciation = (number of units sold/life of unit)(cost-salvage)
However, there is a missing value. The life of the unit is 5000 hours; the cost is $120,000; the salvage value or the residual value is $15000. There is no data for the number of machines produced in year 2. Technically, we cannot solve this problem. But let's assume it's 100,000 machines for sample purposes. Then,
Depreciation = (100,000/5000)(120,000-15,000)
Depreciation = $2,100,000 per hour
