Question: Entity A is considering scrapping a machine with a useful life of 5 years and replacing it with a more efficient machine. Since the old
- Entity A is considering scrapping a machine with a useful life of 5 years and replacing it with a more efficient machine. Since the old machine has no market value, it cannot be sold after scrapping. It has been determined that the new machine, which can be used for 5 years, will cause a decrease of 25.000TL in annual fixed costs, reducing the total fixed cost to 160.000TL.
- It is estimated that the unit variable cost will increase from 8TL to 10TL if the new machine is purchased.
- The company's sales volume, which is currently 40,000 units, is not expected to change in the next five years.
- The unit sales price of the product is 14 TL. In the case of using old and new machines;
- Calculate profit, profit margin, contribution margin, contribution rate, breakeven sales amount, and the amount and evaluate the appropriateness of the purchase decision.
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Profit Total Revenue Total Cost Total Revenue Unit Sales Price x Sales Volume 14TL x 40... View full answer
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