Units of Production Depreciation Calculator
Units of production depreciation links an asset's expense to how hard it works rather than to the calendar. Instead of spreading cost evenly over a fixed number of years, it charges depreciation in proportion to output, so a machine that runs flat out in one period takes a larger deduction, and a quiet period takes a smaller one. The method has two simple steps. First, you find a per-unit rate by dividing the depreciable base, which is cost minus salvage value, by the total units the asset is expected to produce over its life. Second, you multiply that rate by the units actually produced in the period. This calculator takes the asset cost, the salvage value, the total estimated units and the units produced this period, then returns the depreciation per unit and the depreciation expense for the period. A unit can be anything that tracks wear: items made, miles driven, machine hours or tons hauled. The figures here are book depreciation, the kind used in financial statements; US federal tax depreciation generally uses the time-based Modified Accelerated Cost Recovery System set out in IRS Publication 946. Every figure is computed deterministically from the standard formula, with a worked example and a reference table that reconcile exactly to the calculator.
Units of production depreciation is (cost minus salvage) / total units per unit. A $50,000 asset ($5,000 salvage, 100,000 units) costs $0.45 per unit, so 12,000 units is $5,400.00 of depreciation.
Units of production depreciation formula
per-unit depreciation = (cost - salvage) / total estimated units
period depreciation = per-unit depreciation * units produced this period
cost - salvage = depreciable base
total estimated units = lifetime output the asset will produce
The per-unit rate is fixed for the life of the asset; only the units produced change from period to period. Over the asset's whole life, the units produced add up to the total estimated units, so the depreciation charged adds up to the full depreciable base and book value ends at salvage.
Worked example
A machine costs 50,000, has a salvage value of 5,000, is expected to produce 100,000 units over its life, and produces 12,000 units in the period being costed.
- Depreciable base = 50,000 - 5,000 = 45,000
- Per-unit depreciation = 45,000 / 100,000 = 0.45 per unit
- Period depreciation = 0.45 * 12,000 = 5,400.00
The per-unit rate is 0.45 and the depreciation for the period is 5,400.00. These are the calculator's default inputs, so the results above match the widget exactly.
Period depreciation at different output levels
This table uses the default inputs: cost 50,000, salvage 5,000 and 100,000 total estimated units, giving a fixed rate of 0.45 per unit. Multiply the per-unit rate by the units produced to get the period expense.
| Units produced | Per-unit rate | Period depreciation |
|---|---|---|
| 5,000 | 0.45 | 2,250.00 |
| 10,000 | 0.45 | 4,500.00 |
| 12,000 | 0.45 | 5,400.00 |
| 20,000 | 0.45 | 9,000.00 |
| 100,000 | 0.45 | 45,000.00 |
Method and recovery rules: US Internal Revenue Service, Publication 946.
Units of production depreciation calculator: frequently asked questions
What is units of production depreciation?
Units of production depreciation ties an asset's expense to how much it is used rather than to the passage of time. You first work out a per-unit rate, the depreciable base divided by the total units the asset is expected to produce over its life, then multiply that rate by the units actually produced in a period. A machine that runs hard in one year takes a bigger deduction that year, and an idle machine takes almost none.
How is the per-unit depreciation rate calculated?
The per-unit rate is the cost minus the salvage value, divided by the total estimated units of output over the asset's life. With a cost of 50,000, salvage of 5,000 and a total of 100,000 estimated units, the rate is (50,000 minus 5,000) divided by 100,000, which is 0.45 per unit. The rate stays fixed; the deduction varies with how many units you produce each period.
What can a unit be?
A unit is whatever best measures the asset's output or wear. It can be items manufactured, miles driven, machine hours run, tons hauled or copies printed. The key is that the measure should track how the asset is used up. You estimate the total units the asset will deliver over its life, then record actual units each period to drive the depreciation.
How does it differ from straight-line depreciation?
Straight-line spreads the depreciable base evenly across the years of useful life, regardless of use. Units of production spreads it across units of output, so the expense rises and falls with activity. For assets whose value is driven by usage, like vehicles or production machinery, units of production can match cost to revenue more closely than a time-based method.
Is units of production allowed for US tax depreciation?
The figures here are book depreciation, used in financial statements. US federal tax depreciation generally uses the Modified Accelerated Cost Recovery System (MACRS), a time-based system with set recovery periods and official percentage tables. Units of production is accepted for book purposes and in some specific cases, but for a tax return follow the rules in IRS Publication 946.
Official sources
- Depreciation methods, recovery periods and MACRS tables: US Internal Revenue Service, Publication 946, How To Depreciate Property. As at 24 June 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 24 June 2026. See our methodology. This is general information, not financial, tax, legal or investment advice.