Question : 141.The cash disposal value of old equipment considered to be : 1311778

 

 

141.The cash disposal value of old equipment is considered to be a (an)

a.irrelevant cost.

b.avoidable cost.

c.sunk cost.

d.relevant cost.

 

 

142.Which of the following is not relevant information in a decision whether old equipment presently being used should be replaced by new equipment?

a.The cash price of the new equipment

b.The salvage value of the old equipment

c.The book value of the old equipment

d.The cost savings if the new equipment is purchased

 

 

143.Book value of old equipment is considered to be a

a.relevant cost.

b.semi-relevant cost.

c.sunk cost.

d.cost that can be changed by a present or future decision.

 

 

144.A company is deciding on whether to replace some old equipment with new equipment. Which of the following is not a relevant cost for incremental analysis?

a.Annual operating cost of the new equipment

b.Annual operating cost of the old equipment

c.Net cost of the new equipment

d.Accumulated depreciation on the old equipment

 

 

145.A company is considering replacing old equipment with new equipment. Which of the following is a relevant cost for incremental analysis?

a.Annual depreciation charge on the old equipment

b.Book value of the old equipment

c.Estimated annual depreciation of the new equipment

d.Cost of the new equipment

 

 

146.In a retain or replace equipment decision, trade-in allowance available on old equipment

a.increases the cost of the new equipment.

b.is relevant because it will not be realized if the old equipment is retained.

c.is not relevant to the decision.

d.reduces the cost of the old equipment.

 

 

147.Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:

 

Old MachineNew Machine

Price$300,000$600,000

Accumulated Depreciation90,000-0-

Remaining useful life10 years-0-

Useful life-0-10 years

Annual operating costs$240,000$180,600

 

If the old machine is replaced, it can be sold for $24,000.

 

Which of the following amounts is a sunk cost?

a.$240,000

b.$180,600

c.$600,000

d.$210,000

 

 

148.Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:

 

Old MachineNew Machine

Price$300,000$600,000

Accumulated Depreciation90,000-0-

Remaining useful life10 years-0-

Useful life-0-10 years

Annual operating costs$240,000$180,600

 

If the old machine is replaced, it can be sold for $24,000.

 

Which of the following amounts is relevant to the replacement decision?

a.$210,000

b.$300,000

c.$59,400

d.$90,000

 

 

149.Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:

 

Old MachineNew Machine

Price$300,000$600,000

Accumulated Depreciation90,000-0-

Remaining useful life10 years-0-

Useful life-0-10 years

Annual operating costs$240,000$180,600

 

If the old machine is replaced, it can be sold for $24,000.

 

The net advantage (disadvantage) of replacing the old machine is

a.$18,000

b.$24,000

c.$(6,000)

d.$(60,000)

 

 

150.Abel Company produces three versions of baseball bats: wood, aluminum, and hard rubber. A condensed segmented income statement for a recent period follows:

Wood  AluminumHard Rubber   Total

Sales$500,000$200,000$65,000$765,000

Variable expenses  325,000  140,000  58,000  523,000

Contribution margin175,00060,0007,000242,000

Fixed expenses    75,000    35,000  22,000  132,000

Net income (loss)$100,000$  25,000$(15,000)$110,000

 

Assume none of the fixed expenses for the hard rubber line are avoidable. What will be total net income if the line is dropped?

a.$125,000

b.$103,000

c.$105,000

d.$140,000

 

 

 

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