How to Calculate Units of Production
What is Units of Production?
Units of Production (UOP) is a depreciation method where expense is based on actual use rather than time. Assets like machinery, vehicles, or printing presses depreciate proportionally to the output they produce. More use = more depreciation.
Step-by-Step Guide
- 1Depreciation per unit = (Cost − Salvage value) / Total estimated units of production
- 2Annual depreciation = Units produced that year × Depreciation per unit
- 3Total depreciation = actual use, not calendar-based
- 4Asset life ends when total depreciable base is consumed
Worked Examples
Input
Machine costs $50,000, salvage $5,000, lifetime 100,000 units. Year 1: 20,000 units
Result
$9,000 depreciation in Year 1
(50k−5k)/100k = $0.45/unit × 20k = $9,000
Ready to calculate? Try the free Units of Production Calculator
Try it yourself →