# Units of Production Depreciation Calculator

## Calculator Use

Use this calculator to calculate depreciation based on level of production for each period. Units of production is a differently worded version of our activity depreciation calculator.

### Inputs

- Asset Cost
- the original value of your asset or the depreciable cost; the necessary amount expended to get an asset ready for its intended use
- Salvage Value
- the value of the asset at the end of its useful life; also known as residual value or scrap value
- Useful Units
- the expected number of units that the asset will produce or last for its life (for example, miles, widgets, hours, etc.)
- Units Production in Period
- the number of units used in the period of time you want to calculate depreciation

## Units Production Depreciation

### Formulas

This calculator is for units of production method of depreciation of an asset or, the amount of depreciation for each unit and period. This calculation is equivalent to our units of activity depreciation calculator. The production method calculation results from 3 equations. Depreciation per unit produced and depreciation for a period.

**Depreciable Base**= Asset Cost - Salvage Value**Depreciation per Unit**= Depreciable Base / Total Units-
**Depreciation for Period**= Depreciation per Unit x Number of Units Produced in a Period

### Example

The business purchased a bottle making machine for $750,225 and you expect it to produce 2,000,000 gross of bottles over a life of 10 years with a residual value at the end of 5 years of $25,000. In a given period the machine produced 255,626 gross of bottles. What is depreciation for that period? (gross = 12 dozen = 144 but as long as your units are consistent the actual unit is trivial; the unit we are calculating is gross not bottle)

- Depreciable Base = $750,225 - $25,000 = $725,225
- Depreciation per Unit (gross) = $725,225 / 255,626 Units = $0.3626/unit (rounded to 4 decimal places)
- Depreciation for Period = $0.3626 / Unit x 255,626 Units = $92,689.99