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1. 2. 3. 4. Keating Co. is considering disposing of equipment that cost $62,000 and has $43,400 of accumulated depreciation to date. Keating Co. can
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Keating Co. is considering disposing of equipment that cost $62,000 and has $43,400 of accumulated depreciation to date. Keating Co. can sell the equipment through a broker for $25,000 less a 5% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $47,000. Keating will incur repair, insurance, and property tax expenses estimated at $8,000 over the five- year period. At lease-end, the equipment is expected to have no residual value. The net differential profit or loss from the sell alternative is a a. $10,675 loss Oa. Ob. $18,300 profit Oc. $15,250 loss Od. $22,875 profit Mighty Safe Fire Alarm is currently buying 62,000 motherboards from Motherboard, Inc., at a price of $63 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $33 per unit; direct labor, $9 per unit; and variable factory overhead, $15 per unit. Fixed costs for the plant would increase by $75,000. Which option should be selected and why? Oa. buy, $296,980 increase in profits Ob. buy, $75,000 increase in profits Oc. make, $372,000 increase in profits Od. make, $296,980 increase in profits Stryker Industries received an offer from an exporter for 15,000 units of product at $17.50 per unit. The acceptance of the offer will not affect normal production or domestic sales prices. The following data are available: Domestic unit sales price $20 Unit manufacturing costs: Variable 11 Fixed 1 The differential revenue from the acceptance of the offer is Oa. $250,000 Ob. $300,000 Oc. $52,500 Od. $262,500 Peyton Company manufactures Phone X and Phone Y. Peyton can sell all it can make of either phone. Based on the following data and assuming the number of hours is a constraint, which of the following statements is true? Y Sales price $48 $44 Variable cost 38 28 Time needed to process 5 hours 8 hours Oa. Y is more profitable than X. b. X is more profitable than Y. Oc. Neither X nor Y is profitable. Od. X and Y are equally profitableStep by Step Solution
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