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Exercise $1-16($Algo$)$ Cost Classifications for Decision Making $[$LO$1-5]$

Warner Corporation purchased a machine seven years ago for $$330,000$ when it launched product P$50.$ Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model $300$ machine costing $$323,400$ or by a new model $200$ machine costing $$286,600.$ Management has decided to buy the model $200$ machine. It has less capacity than the model $300$ machine, but its capacity is sufficient to continue making product P$50.$ Management also considered, but rejected, the alternative of dropping product P$50$ and not replacing the old machine. If that were done, the $$286,600$ invested in the new machine could instead have been invested in a project that would have returned a total of $$393,000.$

Required:

What is the total differential cost regarding the decision to buy the model $200$ machine rather than the model $300$ machine?

What is the total sunk cost regarding the decision to buy the model $200$ machine rather than the model $300$ machine?

What is the total opportunity cost regarding the decision to invest in the model $200$ machine?

$\backslash$table$[[1.$ Differential cost,$],[2.$ Sunk cost,$],[3.$ Opportunity cost,$]]$