Reference no: EM132011468
Question - Manger at X company purchases a cutting machine last year. 6 months after the purchase, he learned about a new cutting machine that is more reliable than the machine he purchased. The following info is available for the two machines:
Old machine
Acquisition Cost $300,000
Remaining Life 4 years
Salvage value now $100,000
Salvage value at end of 4 years $4,000
New Machine
Acquisition Cost $360,000
Remaining Life 4 years
Salvage value at end of 4 years $6,000
Annual operating costs for the old machine are $140,000. The new machine will decrease annual operating costs by $60,000. These amounts do not include any charges for depreciation. Company uses straight-line depreciation method. These estimates of operating costs exclude rework costs. The new machine will also result in a reduction in the defect rate from the current 5% to 2.5%. All defective units are reworked at a cost of $1 per unit. The company, on average produces 100,000 units annually.
a. Should manager replace old machine with new machine? Explain listing all relevant costs.
b. What costs should be considered as sunk costs for this decision?
c. What other factors may affect young's decision?
|
Record the transactions using t-accounts
: July 24 Paid wages in the amount of $400. This was for work performed during July. Required - Record the transactions, using T-accounts
|
|
What is the speed of the probe
: What is the speed of the probe when it is 2.9 × 106 m from Zero's center? The gravitational constant is 6.6726 × 10^-11 N· m2/kg2.
|
|
Your relationship with the unethical person
: This assignment asks you to consider ethics and whistleblowers. Select one of the behaviors listed below for your discussion posting.
|
|
Removed the original pressure
: If the tire reaches a temperature of 37°C, what fraction of the original air must be removed if the original pressure of 210 kPa is to be maintained?
|
|
What other factors may affect young''s decision
: Annual operating costs for the old machine are $140,000. What other factors may affect young's decision? What costs should be considered as sunk costs
|
|
What is the volume of the tank
: A storage tank at STP contains 15.0 kg of nitrogen (N2). (a) What is the volume of the tank?
|
|
Produce a gauge pressure
: If the oxygen is replaced by helium, how many kilograms of the latter will be needed to produce a gauge pressure of 7.00 atm?
|
|
Discuss team identity
: Discuss team identity. Why do you feel attached to certain groups and teams but not to others?
|
|
What is the volume
: If 2.00 m3 of a gas initially at STP is placed under a pressure of 5.00 atm, the temperature of the gas rises to 32.0°C. What is the volume?
|