ABC Company purchases a new machine for cash. The machine costs are $150,000. The company also must pay freight of $750 to get the machine delivered and $500 to get the machine installed. The equipment company has agreed to a 10% reduction in price if ABC accepts the machine by the end of June - which ABC has agreed to. ABC has decided to depreciate the machine by the units of output method. It determines there is salvage value of $2500. The machine will be depreciated over 5 years. The following is the information for units of output.
Year 1 1250 hours
Year 2 1500 hours
Year 3 2000 hours
Year 4 2500 hours
Year 5 1750 hours