Determine the machines' first year depreciation under the units-of-production method.

A) $27,000.
B) $54,000.
C) $24,000.
D) $25,800.
E) $48,000.

To calculate depreciation using the units-of-production method, we need to first calculate the depreciation rate per unit.

Depreciable cost = cost - salvage value = $135,000 - $15,000 = $120,000

Depreciation rate per unit = depreciable cost / total units of production over the machine's life = $120,000 / 300,000 units = $0.40 per unit

To calculate the first year depreciation, we simply multiply the depreciation rate per unit by the number of units produced in the first year:

First year depreciation = depreciation rate per unit * units produced in first year

First year depreciation = $0.40 * 64,500 units = $25,800

Therefore, the correct answer is (D) $25,800.