A company is planning to replace an old machine with a new one. Which of the following is a sunk...
Question:
A company is planning to replace an old machine with a new one. Which of the following is a sunk cost?
a. cost of the new machine
b. sales price of the old machine
c. future maintenance costs of the old machine
d. original cost of the old machine
Costs:
When making decisions about what a company should or should not do with its funds, it must consider relevant costs. Future costs must be weighed against future profits to make sure a decision made is ideal and efficient.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answerThe correct answer is D) The original cost of the old machine.
Regardless of what the business does moving forward, this cost is already paid and...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Sunk Costs: Definition & Examples
from
Chapter 31 / Lesson 8
75K
Understand the sunk cost definition. Learn the meaning of sunk cost and sunk cost trap with the help of the sunk cost examples and sunk cost fallacy examples.
Related to this Question
- A company is considering replacing an old piece of machinery, which cost $602,200 and has $351,200 of accumulated depreciation to date, with a new machine that costs $483,800. The old machine could be
- Machine Replacement Decision : A company is considering replacing an old piece of machinery, which cost $600,500 and has $348,800 of accumulated depreciation to date, with a new machine that costs $48
- A company is considering replacing an old piece of machinery, which cost $597,900 and has $352,300 of accumulated depreciation to date, with a new machine that costs $486,100. The old machine could be
- A company is considering replacing an old piece of machinery, which cost $600,000 and has $350,000 of accumulated depreciation to date, with a new machine that has a purchase price of $545,000. The ol
- You are thinking of buying a new machine for your business. The cost of the new machine is $50,000 and it will have a depreciable life of 5 years. This machine will save you $10,000 a year in operating costs. Your firm uses straight-line depreciation. Has
- Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $534,000 or a new model 220 machine costing $422,000 to replace a machine that was purchased 5 years ago for $473,000. The old machine was used to make
- Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $443,000 or a new model 220 machine costing $404,000 to replace a machine that was purchased 12 years ago for $411,000. The old machine was used to mak
- Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $470,000 cost with an expected four-year life and a $21,000 salvage value. All sales are for cash, and all costs are out-
- An existing machine can be kept if $1,000 is spent now to update it for future service requirements. Alternatively, the company can purchase a new machine to replace the old machine. The following est
- X Company bought a machine three years ago for $135,000 but is considering replacing it with a new, more efficient one. The new machine will cost $170,000. Both machines will last for five more years, and both will be worth zero at that time. The current
- A company must decide whether to buy Machine A or Machine B. After 5 years, Machine A will be replaced with another A. The initial cost for Machine A is $12,500, annual maintenance is $1,000, and the salvage value at 5 years is $10,000. Machine B has an i
- A company's old machine that cost $56,000 and had accumulated depreciation of $44,400 was traded in on a new machine having an estimated 20-year life with an invoice price of $67,600. The company also paid $57,400 cash, along with its old machine to acqui
- A company's old machine that cost $40,000 and had accumulated depreciation of $22,000 was traded in on a new machine having an estimated 20-year life with an invoice price of $45,000. The company also paid $33,000 cash, along with its old machine to acqui
- A company's old machine that cost $47,000 and had accumulated depreciation of $36,300 was traded in on a new machine having an estimated 20-year life with an invoice price of $57,700. The company also paid $49,300 cash, along with its old machine to acqui
- New machine costs $77,000 and is expected to be able to be used to replace an outsourced job that would cost $20,000 for each of the next 10 years. You expect to sell the machine after 10 years of use for a salvage value of $5,000. The initial cost of the
- A firm is considering the purchase of one of two new machines. The data on each are as follows: Initial cost $3,400 $6,500 Service life 3 Years 6 Years Salvage Value $100 $500 Net operating cost after
- A company is planning to purchase a machine that will cost $36,000, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's o
- 1. A company is planning to purchase a machine that will cost $28,800, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine'
- 1. A company is planning to purchase a machine that will cost $30,000, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine'
- A company is planning to purchase a machine that will cost $27,600, have a six-year life, and be depreciated over a six-year period with no salvage value. The company expects to sell the machine's out
- A company is planning to purchase a machine that will cost $31,200, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's o
- A company is planning to purchase a machine that will cost $32,400, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's o
- A company is planning to purchase a machine that will cost $30,600, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's o
- A company is planning to purchase a machine that will cost $25,200, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's o
- 1) A company is planning to purchase a machine that will cost $30,600, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine'
- A company is planning to purchase a machine that will cost $24,600, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's o
- A company is planning to purchase a machine that will cost $155,000, have a seven-year life, and be depreciated using the straight-line method with no salvage value. The company expects to sell the machine's output of 4,000 units evenly throughout each ye
- A company is considering replacing an old piece of machinery, which cost $598,000 and has $349,500 of accumulated depreciation to date, with a new machine that has a purch
- Tangen Corporation is considering the purchase of a machine that would cost $394,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $87,000. By reducing labor and other operating costs, the machine would provi
- The new machine cost $320,000 16 years of useful life no salvage value new machine cost $54,000 per year to operate and maintain saves $95,000 per year in labor and other costs old machine can be sold now for scrap for the $32,000. The simple rate of ret
- A company is planning to purchase a machine that will cost $24,000, have a 6-year life, and have no salvage value. The company expects to sell the machine s output of 3,000 units evenly throughout eac
- A company is considering replacing an old piece of machinery, which cost $105,000 and has $55,000 of accumulated depreciation to date, with a new machine that has a purchase price of $83,000. The old machine could be sold for $56,300. The annual variable
- A company is considered replacing an old piece of machinery which cost 600,000 and has 350,000 of accumulated depreciation to date, with a new machine that costs 528,000. the old machine could be sold
- A company is considering the purchase of a machine that would cost $320,000 and would last for 7 years. At the end of 7 years, the machine would have a salvage value of $51,000. By reducing labor and other operating costs, the machine would provide annual
- A company must decide between two new machines. The first machine has an initial cost of $45,000 with an estimated life of 12 years and a salvage value of $8,000. Its annual operating cost is $4,000.
- A company's old machine, which cost $30,000 and had accumulated depreciation of $21,000, was traded in on a new machine of like purpose having an estimated 20-year life with an invoice price of $40,000. The company also paid $33,000 cash, along with its o
- A company is planning to purchase a machine that will cost $35,400, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A pro
- A company is planning to purchase a machine that will cost $30,600, have a 6-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A proje
- A company is planning to purchase a machine that will cost $25,800, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A pro
- A company is planning to purchase a machine that will cost $24,000, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine s output of 3,000 units evenly throughout each year. A pro
- A company is planning to purchase a machine that will cost $30,600, have a six-year life, and be depreciated over a three-year period with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A pro
- A company is planning to purchase a machine that will cost $57000 with a six-year life and no salvage value. The company expects to sell the machine output of 3,000 units evenly throughout each year.
- A company is considering replacing an old piece of machinery, which cost $600,000 and has $350,000 of accumulated depreciation to date, with a new machine that has a purchase price of $545,000. The old machine could be sold for $231,000. The annual variab
- A company is considering purchasing a new machine costing $10,000. The machine is expected to have a salvage value of $1500 whenever it is retired. The operating disbursements for the first year are e
- Sibble Corporation is considering the purchase of a machine that would cost $320,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $57,000. By reducing labor and other operating costs, the machine would provi
- Sibble Corporation is considering the purchase of a machine that would cost $440,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $82,000. By reducing labor and other operating costs, the machine would provi
- Sibble Corporation is considering the purchase of a machine that would cost $320,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $49,000. By reducing labor and other operating costs, the machine would provi
- Sibble Corporation is considering the purchase of a machine that would cost $320,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $50,000. By reducing labor and other operating costs, the machine would provi
- Sibble Corporation is considering the purchase of a machine that would cost $380,000 and would last for 5 years. At the end of 5 years, the machine would have a salvage value of $75,000. By reducing labor and other operating costs, the machine would provi
- A company is planning to purchase a machine that will cost $30,000, have a six year life and be depreciated over a have a the machine's output of 3,000 three-year period with no salvage value. The com
- Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered: Old Machine New Machine Price $300,000 $600,000 Accumulated Depreciation 90,
- Horn Company is considering the purchase of a new machine for $108,000. The machine would replace an old piece of equipment that costs $41,830 per year to operate. The new machine would cost $25,720 per year to operate. The old machine currently in use ca
- A company is considering the purchase of a new machine for $59,000. Management predicts that the machine can produce sales of $17,100 each year for the next 10 years. Expenses are expected to include
- A company is considering the purchase of a new machine for $44,800. Management predicts that the machine can produce sales of $28,000 each year for the next 10 years. Expenses are expected to include
- A company is considering the purchase of a new machine for $62,000. Management predicts that the machine can produce sales of $17,400 each year for the next 10 years. Expenses are expected to include
- 1) A company is considering the purchase of a new machine for $66,000. Management predicts that the machine can produce sales of $22,000 each year for the next 10 years. Expenses are expected to inclu
- A company is considering the purchase of a new machine for $63,000. Management predicts that the machine can produce sales of $17,500 each year for the next 10 years. Expenses are expected to include
- A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include
- 1.) A company is considering the purchase of a new machine for $52,000. Management predicts that the machine can produce sales of $16,400 each year for the next 10 years. Expenses are expected to incl
- A company is considering the purchase of a new machine for $54,400. Management predicts that the machine can produce sales of $37,600 each year for the next 10 years. Expenses are expected to include
- A company is considering the purchase of a new machine for $53,000. Management predicts that the machine can produce sales of $16,500 each year for the next 10 years. Expenses are expected to includ
- A company is considering the purchase of a new machine for $54,000. Management predicts that the machine can produce sales of $16,600 each year for the next 10 years. Expenses are expected to include
- Nevland Corporation is considering the purchase of a machine that would cost $120,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $18,000. By reducing labor and other operating costs, the machine would prov
- Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing $534,000 or a new model 240 machine costing $422,000 to replace a machine that was purchased 5 year
- A machine shop has the opportunity to purchase a new machine for $20,000. After carefully studying projected costs and revenues, the company estimates that the new machine will produce a net cash flow of $2,600 annually and will last for ten years. At the
- Burtle Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $488,000 cost with an expected four-year life and a $15,200 salvage value. All sales are for cash, and all costs are out
- Factor Company is planning to add a new product to its line. To manufacture this product, the com new machine at a $495,000 cost with an expected four-year life and a $23,000 salvage value. All sales
- Management of Childers Corporation is considering whether to purchase a new model 370 machine costing $511,000 or a new model 240 machine costing $471,000 to replace a machine that was purchased 7 yea
- A machine costing $153,000 was purchased on May 1. The machine should be obsolete after four years and, therefore, no longer useful to the company. The estimated salvage value is $15,000. Calculate the depreciation expense for each year of its expected u
- Almendarez Corporation is considering the purchase of a machine that would cost $320,000 and would last for 7 years. At the end of the 7 years, the machine would have a salvage value of $51,000. By reducing labor and other operating costs, the machine wou
- A machine that cost $40,000 and had accumulated depreciation of $30,000 was traded in on a new machine, which had an estimated 20-year life and a cash price of $50,000. If a $7,000 trade-in allowance was received on the old machine, the new machine should
- Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $491,000 cost with an expected four-year life and a $19,000 salvag
- A machine costing $145,800 is purchased on May 1, 2013. The machine is expected to be obsolete after three years (36 months) and, thereafter, no longer useful to the company. The estimated salvage value is $5,400. Compute depreciation expense for both 20
- A machine costing $145,800 is purchased on May 1, 2013. The machine is expected to be obsolete after three years (36 months) and, thereafter, no longer useful to the company. The estimated salvage value is $5,400. Compute depreciation expense for both 201
- Which cost is not relevant to the decision whether to purchase a new chocolate dipping machine or continue using the old one: a) The cost of the new machine. b) Lower maintenance costs for the new machine. c) The cost of the old machine. d) Additional
- Sparky Company is considering the replacement of an old machine with the purchase of a new piece of production equipment that will reduce labor and maintenance costs by $45,000 per year. If
- The management of Elamin Corporation is considering the purchase of a machine that would cost $305,745 and would have a useful life of 9 years. The machine would have no salvage value. The machine would reduce labor and other operating costs by $51,000 pe
- Teaque Company purchased a new machine on Janurary 1, 2014, at a cost of $150,000. The machine is expected to have an eight-year life and a $15,000 salvage value. The machine is expected to produce 67
- A company is replacing an old machine with a new one. The old machine is being sold for $200,000 and has a book value of $50,000. The tax rate for the firm is 40%. What are the net proceeds for the sale of the old machine? a. $90,000 b. $140,000 c. $15
- The Tidwell Company is considering buying a new machine costing $18,000. Tidwell estimates that this machine will save $5,000 per year in cash operating expenses for the next five years. If the machine has no salvage value at the end of five years, comput
- If machine A cost $13,000, had accumulated depreciation of $4,000 at the end of the year after all adjustments and was being depreciated over ten years with no expectation of salvage then how old do you think the machine is at the end of that particular y
- A firm is considering purchasing a machine that costs $55,000. It will be used for six years, and the salvage value at that time is expected to be zero. The machine will save $25,000 per year in labor, but it will incur $7,000 operating and maintenance co
- The Zone Company is considering the purchase of a new machine at a cost of $1,040,000. The machine is expected to improve productivity and thereby increase cash inflows by $250,000 per year for 7 years. It will have no salvage value. The company requires
- 1. A machine purchased three years ago for $314,000 has a current book value using straight-line depreciation of $181,000; its operating expenses are $38,000 per year. A replacement machine would cost
- A machine purchased three years ago for $302,000 has a current book value using straight-line depreciation of $189,000; it's operating expenses are $37,000 per year. A replacement machine would cost $
- A machine purchased three years ago for $309,000 has a current book value using straight-line depreciation of $181,000: its operating expenses are $34,000 per year. A replacement machine would cost $2
- BSU Inc. is planning to purchase a new machine for $41,100, excluding $1,500 of installation costs. The old machine was bought five years ago and had an expected economic life of 10 years without salvage value. This old machine now has a book value of $2,
- The Roger Company is planning to purchase a new machine at a cost of $660,000, which will depreciate on a straight-line basis over a 10-year period with $60,000 salvage value and a full year's depreciation taken in the year of acquisition. The new machine
- New machine costs: $300,000 software and installation: $84,000 maintence per year: 48,000 replacement of parts in 3 years: $47,000 would save : $114,000+$7,500 per year old scraps of old machine: $17,000 salvage value in year six $30,000 rate of return: 1
- Delaney Company is considering replacing equipment that originally cost $600,000 and which has $420,000 accumulated depreciation to date. A new machine will cost $790,000 and the old equipment can be sold for $8,000. What is the sunk cost in this situatio
- Concorde Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $100,000 cost with an expected five-year life and a $25,000 salvage value. All sales are for cash and all costs are out
- Delaney Company is considering replacing equipment which originally cost $600,000 and which has $420,000 accumulated depreciation to date. A new machine will cost $790,000. What is the sunk cost in th
- Tak Company has a machine with a book value of $50,000 and a remaining five-year useful life. A new machine is available at a cost of $75,000, and Tak can also receive $40,000 for trading in its old machine. The new machine will reduce variable manufactur
- A company has decided to discontinue as a product produced on a machine purchased 4 years ago at a cost of $70,000. The machine has a current book value of $30,000. Due to technology improved machinery now available in the marketplace, the existing machin
- Tangen Corporation is considering the purchase of a machine that would cost $380,000 and would last for 6 years. At the end of 6 years, the machine would have a salvage value of $80,000. By reducing l
- A company is considering the purchase of a new machine that will cost the company $30,000 and will be worth zero at the end of 3 years. Their current tax rate is 20% and they will depreciate the machi
- Hinshaw Company purchased a new machine on October 1, 2014, at a cost of $96,100. The company estimated that the machine has a salvage value of $6,400. The machine is expected to be used for 71,900 wo
- Hinshaw Company purchased a new machine on October 1, 2014, at a cost of $86,280. The company estimated that the machine has a salvage value of $7,590. The machine is expected to be used for 63,800 wo
- Hinshaw Company purchased a new machine on October 1, 2014, at a cost of $88,980. The company estimated that the machine has a salvage value of $8,640. The machine is expected to be used for 62,580 wo
- Hinshaw Company purchased a new machine on October 1, 2014, at a cost of $98,500. The company estimated that the machine has a salvage value of $6,400. The machine is expected to be used for 72,400 wo
Explore our homework questions and answers library
Browse
by subject