Relevant and sunk costs McKinnon Company's plant manager is considering buying a new grinding machine to replace an old grinding machine or overhauling the old one to ensure compliance with the plant's high-quality standards. The following data are available:

Required(a) What costs should the decision maker consider as sunk costs?(b) List all relevant costs and when they are incurred.(c) What should the plant manager do?Why?

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OLD GRINDING MACHINE $50,000 40,000 18,000 4,000 Original cost Accumulated depreciation Annual operating costs Current salvage value Salvage value at the end of 5 years NEw GRINDING MACHINE Cost $70,000 13,000 500 Annual operating costs Salvage value at the end of 5 years OVERHALL. OF OLD GRINDING MACHINE Cost of overhaul Annual operating costs after overhaul Salvage value at the end of 5 years $25,000 14,000 200