Question : 131.Hi-Tech Inc. has several outdated computers that cost a total : 1311777

 

 

131.Hi-Tech Inc. has several outdated computers that cost a total of $17,800 and could be sold as scrap for $4,600. They could be updated for an additional $2,400 and sold. If Hi-Tech updates the computers and sells them, net income will increase by $9,000. What amount would be considered sunk costs?

a.$2,400

b.$9,000

c.$17,800

d.$20,200

 

 

132.When deciding whether or not to replace old equipment with new equipment, the overriding consideration is the

a.book value of the old equipment.

b.cost of replacing the old equipment.

c.salvage value of the old equipment.

d.difference between future cost savings and the new equipment’s costs.

 

 

133.In an equipment replacement decision, the cost of the old equipment is a(n)

a.incremental cost.

b.sunk cost.

c.relevant cost.

d.opportunity cost.

 

 

134.Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following data has been collected:

Old EquipmentNew Equipment

Purchase price$225,000$375,000

Accumulated depreciation90,000- 0 –

Annual operating costs300,000240,000

If the old equipment is replaced now, it can be sold for $60,000. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years.

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

a.$375,000

b.$135,000

c.$315,000

d.$60,000

 

 

135.Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following data has been collected:

Old EquipmentNew Equipment

Purchase price$225,000$375,000

Accumulated depreciation90,000- 0 –

Annual operating costs300,000240,000

If the old equipment is replaced now, it can be sold for $60,000. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years.

What is the net cost of the new equipment?

a.$375,000

b.$315,000

c.$150,000

d.$75,000

 

 

136.Chung Inc. is considering the replacement of a piece of equipment with a newer model. The following data has been collected:

Old EquipmentNew Equipment

Purchase price$225,000$375,000

Accumulated depreciation90,000- 0 –

Annual operating costs300,000240,000

If the old equipment is replaced now, it can be sold for $60,000. Both the old equipment’s remaining useful life and the new equipment’s useful life is 5 years.

The net advantage (disadvantage) of replacing the old equipment with the new equipment is

a.$60,000

b.$(15,000)

c.$(75,000)

d.$90,000

 

 

137.Which of the following is relevant information in a decision whether old equipment presently being used should be replaced by new equipment?

a.The cost of the old equipment

b.The salvage value of the old equipment

c.The book value of the old equipment

d.The accumulated depreciation of the old equipment

 

 

138.A company is deciding whether or not to replace some old equipment with new equipment. Which of the following is not considered in the 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.Book value of the old equipment

 

 

139.What role does a trade-in allowance on old equipment play in a decision to retain or replace equipment?

a.It is relevant since it increases the cost of the new equipment.

b.It is not relevant since it reduces the cost of the old equipment.

c.It is not relevant to the decision since it does not impact the cost of the new equipment.

d.It is relevant since it reduces the cost of the new equipment.

 

 

140.A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?

a.The book value of the old equipment

b.Depreciation expense of the old equipment

c.The loss on disposal of the old equipment

d.The current disposal price of the old equipment

 

 

 

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