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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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Answer:

Explanation:

The journal entries are shown below:

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            To GE shares investment A/c $1,800

(Being the adjustment is recorded)

2. Retained earnings A/c Dr $37,200         (1,200 shares × $31)

           To Property Dividends Payable $37,200

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3. Property Dividends Payable A/c $37,200

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4 0
3 years ago
Fran wants to hire a diverse group of capable people to work at her brand new fitness studios. Unfortunately, many of the applic
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Answer:

use a combination of tests measuring both cognitive abilities and non-cognitive traits such as emotional intelligence and personality

Explanation:

In the given scenario many of the applicants Fran perceives as having good emotional intelligence and agreeable personalities (a plus for a fitness studio), do not score well on the cognitive ability test.

Since she wants people that have non-cognitive traits such as emotional intelligence and personality, and also good cognitive abilities.

She will need to use a combination of tests measuring both cognitive abilities and non-cognitive.

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Tammy wants to track her spending in categories. What tool should she use? Saving and investing plan, net worth statement, budge
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Pine Street Inc. makes unfinished bookcases that it sells for $58.10. Production costs are $37.49 variable and $10.50 fixed. Bec
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Answer:

Pine Street should sell  finished bookcases because they have a higher contribution margin.

Explanation:

We compare the contribution margin of the two categories to find out whether Pine Street should sell unfinished or finished bookcases.

Pine Street Inc.

Unfinished bookcases

Contribution Margin

Sales Price                                         $58.10

Less  Production costs

Variable Costs  $37.49

<u>Fixed Costs $10.50                         (47.99)</u>

<u>Contribution Margin                      $ 10.11</u>

Pine Street should sell  finished bookcases because they have a higher contribution margin. It is almost double of the unfinished book cases contribution margin.

Pine Street Inc.

Finished bookcases

CONTRIBUTION MARGIN

Sales Price                                                                 $74.91

Less Production costs

Variable Costs  $37.49 + $5.79 = $ 43.28

<u>Fixed Costs $10.50                                                     $ (53.78)</u>

<u>Contribution Margin                                               $ 21.13</u>

4 0
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The FDA, but I don't know what the others are.
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