9. The manager of Think-Smart, Inc. is considering a proposal to replace a machine currently used in production with a new one at a cost of $700,000. The following yearly comparative data has been gathered: Old machine 50,000 $280,000 $20,000 Total costs $260,000 $300,000 The old machine has a current book value of $300,000, and a current salvage value of $250,000. Both machines have comparable remaining service lives of four years and have expected salvage values at the end of their service lives of $10,000. (Ignore income taxes and the time value of money.) What is the net advantage (disadvantage) of replacing the old machine? Units to be processed Cash operating expenses Straight-line depreciation expenses New machine 50,000 $200,000 $60,000 a. $80,000 b. ($500,000) c. ($130,000) d. ($380,000) e. None of the above

9. The manager of Think-Smart, Inc. is considering a proposal to replace a machine currently used in production with a new one at a cost of $700,000. The following yearly comparative data has been gathered: Old machine 50,000 $280,000 $20,000 Total costs $260,000 $300,000 The old machine has a current book value of $300,000, and a current salvage value of $250,000. Both machines have comparable remaining service lives of four years and have expected salvage values at the end of their service lives of $10,000. (Ignore income taxes and the time value of money.) What is the net advantage (disadvantage) of replacing the old machine? Units to be processed Cash operating expenses Straight-line depreciation expenses New machine 50,000 $200,000 $60,000 a. $80,000 b. ($500,000) c. ($130,000) d. ($380,000) e. None of the above

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 22E: Thaler Company bought 26,000 of raw materials a year ago in anticipation of producing 5,000 units of...

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