# Units of Production Depreciation Calculator

The units of production depreciation method can be used to calculate the depreciation expense for property, plant and equipment based on the level of units produced. The method is particularly useful in a manufacturing environment where a production asset reduces in value in proportion to the amount it is used.

The calculation is carried out using the units of production depreciation formula which takes the cost of the asset less any expected salvage (residual) value, and divides this by the expected lifetime production capacity of the asset in units of production. The formula used in the units of production depreciation calculator is given as follows:

Units of production depreciation = (Cost – Salvage value) / Expected lifetime units

Full details of how the method is used can be found in our units of production depreciation tutorial. ## Using the Units of Production Depreciation Calculator

The Excel units of production depreciation calculator, available for download below, is used to compute units of production depreciation by entering details relating to the asset and unit production levels. The calculator is used as follows:

1. Enter the cost of the asset. The cost of the asset can be found in the long term asset account, asset register, or on the original source document (invoice) for the asset
2. Enter the salvage value. The salvage or residual value is the amount the asset is expected to be worth at the end of its useful life. The units of production depreciation calculator works out the cost which is subject to depreciation, known as the depreciable cost.
3. Enter the lifetime units of production. The lifetime units of production is the number of units which the asset is expected to produce during its lifetime with the business. The units of production depreciation calculator works out the depreciation per production unit for the asset.
4. Enter the period units of production. The period units of production is the number of units actually produced by the asset during the accounting period. The units of production depreciation calculator works out the depreciation expense for the asset for the accounting period.

## Units of Production Depreciation Calculator Download

The units of production depreciation spreadsheet is available for download in Excel format by following the link below.

Notes and major health warnings
Users use this units of production depreciation calculator at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of a units of production method of depreciation calculator that you might use when considering how to calculate units of production depreciation. It is purely illustrative. This is not intended to reflect general standards or targets for any particular business, company or sector. If you do spot a mistake in this units of production calculator, please let us know and we will try to fix it.
Last modified July 16th, 2019

## About the Author

Chartered accountant Michael Brown is the founder and CEO of Double Entry Bookkeeping. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a degree from Loughborough University.