Calistoga Winery has four machines of approximately 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):

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

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No. 3 No. 1 1/1/00 2,500 No. 2 No. 4 Date Cost of Machine Operating Costs, Year 4: 1/1/01 4,000 1/1/03 5,000 1/1/04 7,000 Labor Materials Maintenance $15,000 4,000 500 Depreciation (a fixed cost200 $19,700 $19,000 4,500 500 300 $24,300 $18,000 5,000 500 300 $23,800 $21,000 2,500 400 500 $24,400 Total 0perating Costs