Units of Production Depreciation Calculator

Depreciate an asset based on how much it's actually used, not just time.

How it is calculated

Depreciation follows use, not time. rate_per_unit = (cost − salvage_value) ÷ total_expected_units, accumulated = rate_per_unit × (accumulated_units_prior + units_this_period), period_depreciation = accumulated − depreciation already taken on the prior units and book_value = cost − accumulated. A unit can be a part made, an hour run or a mile driven, but all three unit fields must use the same one. Enter 0 for prior units in the first period. Depreciation stops at the salvage value: once prior plus current units reach the expected lifetime units, accumulated depreciation is capped at cost minus salvage, the period expense shrinks to what is left (or to zero) and book value never goes below salvage. Salvage above cost, expected units of zero, a blank field or any negative input returns no result.

Worked example

A machine costs $80,000, has a salvage value of $8,000 and is expected to produce 600,000 units in its life. It has already made 120,000 units and makes 45,000 this period. Rate per unit: (80,000 − 8,000) ÷ 600,000 = $0.12. Depreciation this period: 0.12 × 45,000 = $5,400.00. Accumulated: 0.12 × (120,000 + 45,000) = $19,800.00. Book value: 80,000 − 19,800 = $60,200.00.

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Common mistakes

  • Mixing units, for example lifetime estimate in hours but this period's output in pieces. The rate per unit is then meaningless; use one unit for all three fields.
  • Including this period's units in the prior-units field. That field is usage before this period, and the tool adds the current period itself, so counting it twice overstates accumulated depreciation.
  • Depreciating the full cost. The salvage value is subtracted first, so only $72,000 here is spread across the 600,000 units.
  • Expecting depreciation to continue once total usage passes the estimate. With 580,000 prior units the same 45,000 units give only $2,400.00 (the last of the $72,000 base), and with 700,000 prior units the period expense is $0.00; revise the expected units if the asset keeps working.
  • Leaving prior units blank in year one. The field needs 0, otherwise no result is shown.

About this calculator

The units-of-production depreciation method expenses an asset's cost based on how much it is actually used during a period — measured in units produced, hours run, or miles driven — rather than on a fixed time schedule like straight-line depreciation. The formula is: depreciation per unit = (cost − salvage value) ÷ total estimated lifetime units, and period expense = depreciation per unit × units produced in that period, making it an accepted method under US GAAP for assets whose wear correlates with usage rather than age.

Manufacturing companies use this method for machinery, vehicles, and equipment whose useful life is tied more closely to how hard they are worked than to the calendar — a factory press that runs double shifts wears out faster than an identical press sitting mostly idle, and units-of-production depreciation reflects that reality in the financial statements, matching expense to the revenue the asset actually helped generate.

This calculator takes an asset's cost, salvage value, estimated total lifetime units, and units produced this period to compute depreciation expense, accumulated depreciation, and remaining book value.

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