20)

ABC Company is considering replacing an old machine with a new machine. Which of the following items is relevant to ABC's decision? (Ignore income tax considerations.)

a.

Both A & B.

b.

Neither A nor B.

c.

Disposal value of new machine

d.

Book value of old machine

8)

Sport Company produces a single product, a special gear used in automatic transmissions. Each gear sells for $28 and the company sells 500,000 gears each year. Unit cost data are presented below: direct material $6 (variable), direct labor $5 (variable), manufacturing overhead $2 (variable) and $7 (fixed) and selling & administrative $4 (variable) and $3 (fixed). The unit product cost of gears under variable costing is:

a.

$20

b.

$27

c.

$17

d.

$13