A company is considering replacing an old piece of machinery, which cost $600,000 has $350,000 of accumulated
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A company is considering replacing an old piece of machinery, which cost $600,000 has $350,000 of accumulated depreciation to date, with a new machine that has a: chase price of $545,000. The old machine could be sold for $231,000. The annual variable production costs associated with the old machine are estimated to be $61,000 per year for eight years. The annual variable production costs for the new machine are estimated to be $19,000 per year for eight years.
a. Prepare a differential analysis dated September 13 to determine whether to con* with (Alternative 1) or replace (Alternative 2) the old machine.
b. What is the sunk cost in this situation?
Related Book For
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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