QS $23-4($Algo$)$ Identifying sunk and relevant costs LO C$1$

For these two separate cases, Identify each Item as a sunk cost, a relevant cost, or a relevant revenue.

A company is considering replacing an old machine. The old machine has a book value of $$57,500$ and a remaining five$-$year life.

The old machine can be sold now for $$62,500.$ The new machine can be purchased for $$107,500.$

A company spent $$9,500$ to make shirts. Customer tastes have changed and the shirts cannot be sold for thelr normal price. The

shirts can be sold as is to another manufacturer to make into rags for $$8,500.$ Instead, the company can spend $$13,500$ to rework the

shirts with different designs. The reworked shirts can be sold for $$17,500.$

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Required $1$

Required $2$

A company is considering replacing an old machine. The old machine has a book value of $$57,500$ and a remaining five$-$year

life. The old machine can be sold now for $$62,500.$ The new machine can be purchased for $$107,500.$