Answer:
Company A
a. Differential Analysis dated May 29
Alternative 1 Alternative 2
Opportunity cost $250,000 $550,000
Variable production costs 580,000 192,000
Total cost $830,000 $742,000
b. Sunk cost in this situation is: $225,000 ($400,000 - $175,000) cost of the old machine.
Explanation:
Company A's relevant cost for the old machine is the opportunity cost that it will lose if it continues with Alternative 1 or continued use of the old machine and the additional cost for the new machine for Alternative 2. Also relevant is the variable production costs that would be incurred if the old or new machine is used.
Company A's sunk cost is the cost of the old machine minus accumulated depreciation. Sunk cost is not relevant for decision making under differential analysis.
Company A's differential analysis is a managerial tool that is used to differentiate one decision alternative from another. In this analysis, only relevant costs are considered. A relevant cost in this case is cost that its inclusion or elimination makes a difference in the decision outcome.
There are different kinds of estate. In a freehold estate immobility describes when the ownership includes all immovable structures attached to the land such as buildings, trees, and underground resources.
Freehold estates is known to be made up of 2 components. They are:
- immobility: This is simply the ownership of all immovable structures that is attached to land.
- An indefinite ending: This is known to stay or exist for a lifetime.
Freehold estates are simply known to be a type of estates that has indefinite lifetime and it can exist for a lifetime or forever.
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B. Accumulating Wealth. It is the way to understand and continuously add to the wealth.
<h3>What is Wealth/Income?</h3>
Wealth or income is the amount that is earned by individuals, the income is earned in many different ways for example an individual can have a business to earn the income, or an individual can have a job that is salary based. Wealth is the other name of income.
Another method of earning and increasing wealth is Interest Income, when an amount is deposited with a financial institution the amount is added with the interest income.
Interest income is calculated on the interest rate, interest rate is the market rate in the prevailing economy. Income can be earned more by working hard and there are many ways to earn income and it is the goal of all the individuals to grow their wealth.
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Although there is no question here, I am assuming that this is a True/False question because it is a False statement.
A certificate of deposit is an investment with a fixed interest rate for a fixed period of time. There are nearly always penalties for early withdrawal.
