DJ Woodwork is considering the replacement of its painting booth.

Here is the information supplied by the controller

                                           Old Paint Booth                    New Paint Booth

Original cost                                 $42,000                                   $35,000

Useful life in years                                 7                                                5

Current age in years                              2                                               0

Book value                                   $30,000                                               -

Disposal value now                    $15,000                                               -

Annual cash operating costs      $6,000                                     $3,000

Given the above information, make a well written recommendation to the owners of DJ Woodworking. Show which costs are relevant and tell them what benefit of the new booth would be, (or not be).

Answer rating: 100% (QA)

Relevant cost analysis Old New Differential Paint Booth Paint Booth 35000 15000 15000 35000 impact 3... View the full answer