Question: company uses straight - line depreciation, while the machine has a useful life of 1 0 years.Company A is considering buying another machine costing $

company uses straight

-

line depreciation, while the machine has a useful life of

10

years.Company A is considering buying another machine costing $

45, 000

with a useful life of

9

years. The new machine wont have any effect on the number of units that a company produces. Company A

,

however, expects the variable cost to come down from $

34, 000

to $

22, 000 .

Fixed costs will also be the same at $

20, 000 .

Using the above information, determine which are relevant and which are irrelevant and the cost implication for the company. Provide a justification for your choice.

(

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Mandisa Fox started a company, Foxy Shirts, which manufactures imprinted shirts for special occasions. Since day one, Mandisa has rented the equipment from a local printing shop when necessary. The...

please need the answer ASAP please and correctly course b292 The classification of costs between relevant costs and irrelevant costs is important in the context of managerial decision-making. A....

Oprian Company uses straight line depreciation for a machine costing $47,300. When it was purchased, the company estimated that it would have a useful life of 7 years and a salvage value of $5,000....

Ch Pablo Company is considering buying a machine that will yield income of $3,300 and net cash flow of $19,000 per year for three years. The machine costs $57,600 and has an estimated $10,506 salvage...

Create the journal entries for the following situations and post them to t-accounts: 1. ABC Company purchased $500 of raw materials on account 2. Company Y purchased a new office equipment for $3,000...

1 Server Jute Expo is considering an uvestment proposal to install new machine costing tk 50,000 Salvage value tk 2500. The machine ltas a life expectancy of five years and has no salvage value....

a on Januaryt purchased a patent for $4600 cashlestimated useful tehtyears On January purchased the assets not detailed of another business for $157000 cash including $14000 for goodwi The company...

1. DG Company acquired all of the outstanding common stock of AB Company for $76,000,000. The book values and fair values of AB Company assets and liabilities are as follows: Book Value Fair Value...

Ronny's Red Hat Company purchased machinery on July 3, Year 1 for $150,000. Ronny, the owner, estimated that the machinery would be sold for $20,000 in 10 years. If Ronny's red Hat Company uses...

Apex fitness club uses straight line depreciation for a machine costing $30,150 with an estimated for your life and a $2900 salvage value. at the beginning of the third year Apex determines that the...

Course: Capital Budgeting The problem is labeled "current" and the two other attached files are previous questions leading up to this one with the solution to get an example of how things need to be...

What are bona fide occupational qualifications (BFOQ)? What is a business necessity? Can race be a BFOQ? Can it be a business necessity? Why or why not?

Determine the range of the 2x function y = 3 sec 3

Each of the following scenarios is independent. Assume that all cash flows are after-tax cash flows. a. Cobre Company is considering the purchase of new equipment that will speed up the process for...

Hugo decides to buy his Christmas gifts on Black Friday. To simplify his life, he is giving his 10 closest friends scarves for Christmas and everyone else Christmas cards. Hugo is willing to pay up...