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brilliants [131]
3 years ago
6

Walton Company paid $94,000 to purchase a machine on January 1, 2017. During 2019, a technological breakthrough resulted in the

development of a new machine that costs $117,000. The old machine costs $52,000 per year to operate, but the new machine could be operated for only $7,000 per year. The new machine, which will be available for delivery on January 1, 2019, has an expected useful life of four years. The old machine is more durable and is expected to have a remaining useful life of four years. The current market value of the old machine is $44,000. The expected salvage value of both machines is zero.
Required:a. Calculate the total avoidable costs in keeping the old machine and buy a new machine.b. Should the machine be replaced?YesNo
Business
1 answer:
Sidana [21]3 years ago
3 0

Answer and Explanation:

The computation of total avoidable costs is shown below:-

<u>Particulars              Keep old machine        Buy New machine</u>

Opportunity cost of

buying the old

machine                          $44,000

Purchase amount                                                    $117,000

Operating expenses     $208,000

($52,000 × 4 years)

Operating expenses

($7,000 × 4 years)                                                   $28,000

Total avoidable costs       $252,000                     $145,000

b. The new machine cost is lower to the lower one so it can be replaced.

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Transfer Pricing
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Answer:

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Multinomah= $120,000

Explanation:

Giving the following information:

The materials used by the Multinomah Division of Isbister Company are currently purchased from outside suppliers at $90 per unit. These same materials are produced by the Pembroke Division.

The Pembroke Division can produce the materials needed by the Multinomah Division at a variable cost of $75 per unit. The division is currently producing 120,000 units and has capacity of 150,000 units. The two divisions have recently negotiated a transfer price of $82 per unit for 15,000 units.

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2 years ago
What is market power?
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homeworklib Assume the following for White Top Inc. for the current fiscal year. White Top applies overhead on the basis of unit
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Answer:

50,500 Units

Explanation:

The computation of the number of units produced is shown below:

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