Question: Mountain Gear has been using the same machines to make its name brand clothing for the last five years. A cost efficiency consultant has suggested

 Mountain Gear has been using the same machines to make its

Mountain Gear has been using the same machines to make its name brand clothing for the last five years. A cost efficiency consultant has suggested that production costs may be reduced by purchasinis tore technologically advanced machinery. The old machines cost the company $370.000 The old machines presently have a book value of $137000 and a market value of $29.000. They are expected to have a five-year remaining life and reso salvage value. The new machines would cost the company 5270.000 and have operating expenses of $17.000 a year The new machines are expected to have a five-year stude and no savage value. The operating expenses associated with the old machines are $47000 a year. The new machines are expected to increase quality. justifying a price increase and thereby increasing sales revenue by $27000 a yea Select the true statement Me Choice The company will be 529.000 better till over the year period it at replaces the old equipment The company will be $44.000 better off over the period of replaces the oldet The company will be $45.000 beter of over the year period if it replaces the old equipment o The combi 57000 better off over the period is the old equipment

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!