The Lord Company purchased a machine on January 2, 2007 for $70,000. The machine had an expected residual value of $10,000, an expected life of eight years or 24,000 hours, and a capacity to produce 100,000 units. During 2007, the company produced 12,000 units in 2,500 hours. In 2008, the company produced 15,000 units in 3,000 hours.

Required

Prepare a schedule showing the depreciation for 2007 and 2008 and the book value of the asset at the end of 2007 and 2008 for each of the following methods:

1. Straight-line

2. Hours worked

3. Units of output