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
