Steele Inc. purchased a machine for $500,000 on January 1, Year1. The machine has a $20,000 residual value and an estimated life of 20 years. The machine is expected to produce 1,000,000 widgets over its life. Steele prepares annual financial statements at 12/31 each year.

The machine produced 80,000 widgets in Year1, and 130,000 widgets in Year2 What is depreciation expense for Year1 using the units-of- production method?

	a.	$38,400
	b.	$80,000
	c.	$28,800
	d.	$40,000