Certain production equipment used by cincinnati chemical

Assignment Help Accounting Basics

Reference no: EM13569942

Certain production equipment used by Cincinnati Chemical has become obsolete relative to current technology. The company is considering whether it should keep or replace its existing equipment. To aid in this decision, the company's controller gathered the following data: Old Equipment New Equipment Original cost $350,000 $396,000 Remaining life 5 years 5 years Accumulated depreciation $158,000 $0 Annual cash operating costs $64,000 $16,000 Current salvage value $88,000 NA Salvage value in 5 years $0 $0 a. Identify any sunk costs in the data. b. Identify any irrelevant future costs. c. Identify all relevant costs to the equipment replacement decision. d. What are the opportunity costs associated with the alternative of keeping the old equipment? e. What is the incremental cost to purchase the new equipment? f. What qualitative considerations should be considered before making any decision?

Reference no: EM13569942

Questions Cloud

Determining amount to borrow and pro forma statement : determining amount to borrow and pro forma statement balances athena sudsberry owns a small restaurant in new york

Why do certain accounts have to be audited 100 and why is : why do certain accounts have to be audited 100 and why is materiality allocated only to those accounts that are

Michelle is an employee who must use her personal : michelle is an employee who must use her personal automobile for employment-related business trips. during the current

It is estimated that the direct materials would be id : b comp. uses a job costing system. the following cost data are available from the books for the year ended 31st

Certain production equipment used by cincinnati chemical : certain production equipment used by cincinnati chemical has become obsolete relative to current technology. the

Cyprus corp has excess capacity under what situations : cyprus corp. has excess capacity. under what situations should the company accept a special order for less than the

The company requires a 10 rate of return on all new : cj manufacturing purchased some equipment 3 years ago. the companys required rate of return is 12 and the net present

Lundberg corporations most recent balance sheet and income : lundberg corporations most recent balance sheet and income statement appear below dividends on common stock during year

Aldridge enterprises has a long standing policy of : aldridge enterprises has a long standing policy of acquiring company equipment by leasing. early in 2011 the company

User Account

All Pages