Dropping a machine from service. The Spectra Company has four large sewing machines of a pproximately equal capacity. Each was run at close to its full capacity during Year 4.

Each machine is depreciated separately using an accelerated method.

Data for each machine follow (00 refers to Year 0):

Spectra expects activity in Year 5 to be less than in Year 4. so it will drop one machine from service. Management proposes that Spectra drop No. 4 on the grounds tWhhaty ? i t has the highest operating costs. Do you agree or disagree with this proposal?

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No. 1 No. 2 No. 3 No. 4 Date Acquired Cost 1/1/00 1/1/01 1/1/03 $ 2,500 $ 4,000 $ 5,000 1/1/04 $ 7,000 Operating Costs, Year 4 Labor... Materials Maintenance Depreciation (a fixed cost) Total $15.000 $18,000 $19.000 $21,000 4,000 5.000 4.500 2,500 500 500 500 400 200 300 300 500 $19,700 $23,800 $24,300 $24,400