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Maru [420]
3 years ago
9

Warner Corporation purchased a machine 7 years ago for $405,000 when it launched product P50. Unfortunately, this machine has br

oken down and cannot be repaired. The machine could be replaced by a new model 300 machine costing $396,350 or by a new model 200 machine costing $349,800. 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 P50. Management also considered, but rejected, the alternative of dropping product P50 and not replacing the old machine. If that were done, the $349,800 invested in the new machine could instead have been invested in a project that would have returned a total of $450,600.
Required:
1. What is the total differential cost regarding the decision to buy the model 200 machine rather than the model 300 machine?
2. What is the total sunk cost regarding the decision to buy the model 200 machine rather than the model 300 machine?
3. What is the total opportunity cost regarding the decision to invest in the model 200 machine?
1. Differential cost
2. Sunk cost
3. Opportunity cost
Business
1 answer:
maxonik [38]3 years ago
6 0

Answer:

1. $46,550

2. $405,000

3. $450,600

Explanation:

1. Computation of differential cost regarding the decision to buy the model 200

Differential cost = Cost of a new model 300 - Cost of a new model 200

Differential cost = $396,350 - $349,800

Differential cost = $46,550

So, the differential cost regarding decision to buy model 200 is $46,550.

2. Sunk costs are the costs which are already incurred by the entity in the past and which are not relevant to decision made today. In this case, sunk cost is the cost of the machine purchased seven years ago for $405,000.

3. Opportunity cost is the profit forgone by chosen alternative course of action. In this case, the Opportunity cost regarding the decision to invest in the model 200 machine is $450,600.

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There are four types of competition in a free market system:

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Hope this helps :)

4 0
3 years ago
Suppose a hypothetical economy is currently in a situation of deficient aggregate demand of $16 billion. Four economists agree t
GarryVolchara [31]

Answer:

Economist A

Government spending multiplier $4billion

Tax multiplier $8billion

Economist B

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Tax multiplier $2billion

Explanation:

Computation for the amount the government would have to increase spending to close the output gap according to each economist's belief

ECONOMIST A

Government spending multiplier=16/4

Government spending multiplier=$4billion

Tax multiplier=16/2

Tax multiplier=$8billion

ECONOMIST B

Government spending multiplier=16/2

Government spending multiplier=$8billion

Tax multiplier=16/8

Tax multiplier=$2billion

Therefore the amount the government would have to increase spending to close the output gap according to each economist's belief are :

ECONOMIST A

Government spending multiplier=$4billion

Tax multiplier=$8billion

ECONOMIST B

Government spending multiplier=$8billion

Tax multiplier=$2billion

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Answer: C. an implied contract.

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Unlike an Express Contract, it need not be written down but it does have the same legal weight and strength of a written contract.

The basic principle of this contract is that people should always be treated fairly in business transactions so the need to always pen it down is not necessary.

By walking in and leaving his clothes at the laundry, Bill got into an Implied Contract as it would be unfair for Tom to just clean his clothes with no payment.

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Outstanding cheques​ 3,000

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3 years ago
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That is true, was that your question? :)
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