Please explain:

*Why the correct answer is correct,

*Why the other ones are incorrect or not the best answer.

There are 2 questions:

1) Dinkins Inc. is considering disposing of a machine with a book value of $50,000 and an estimated remaining life of five years. The old machine can be sold for $15,000. A new machine with a purchase price of $150,000 is being considered as a replacement. It will have a useful life of five years and no residual value. It is estimated that variable manufacturing costs will be reduced from $70,000 to $45,000 if the new machine is purchased. The net differential increase or decrease in cost for the entire five years for the new equipment is .

*a) $10,000 increase (correct answer)

b) $25,000 decrease

c) $10,000 decrease

d) $25,000 increase

2) A business received an offer from an exporter for 10,000 units of product at $13.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available:

Domestic unit sales price	$21
Unit manufacturing costs:
Variable	12
Fixed	5

What is the amount of the gain or loss from acceptance of the offer?

a) $75,000 loss

b) $40,000 gain

*c) $15,000 gain (correct answer)

d) $85,000 gain