1. Trail Power has been using the same machines to make its name brand clothing for the last 5 years. A cost efficiency consultant has suggested that production costs may be reduced by purchasing more technologically advanced machinery. The old machines cost the company $270,000. The old machines presently have a book value of $127,000 and a market value of $19,000. They are expected to have a 5 year remaining life and zero salvage value. The new machines would cost the company $170,000 and have operating expenses of $19,000 a year. The new machines are expected to have a 5 year useful life and no salvage value. The operating expenses associated with the old machines are $37,000 a year. The new machines are expected to increase quality, justifying a price increase, and thereby increasing sales revenue by $17,000 a year. Select the true statement.

The company will be $54,000 better off over the 5 year period if it keeps the old equipment.The company will be $35,000 better off over the 5 year period if it keeps the old equipment.The company will be $24,000 better off over the 5 year period if it replaces the old equipment.The company will be $19,000 better off over the 5 year period if it replaces the old equipment.

2.Breezy Company is disposing of equipment that was originally purchased for $340,000 and has $124,000 of accumulated depreciation to date. The same equipment would cost $460,000 to replace. What is the total amount of sunk cost? $460,000 $216,000 $340,000 $124,000

3.Milton Company has three departments occupying the following amount of floor space:

Department 1	24,000 sq. ft.
Department 2	10,900 sq. ft.
Department 3	34,000 sq. ft.

How much store rent should be allocated to Department 2 if total rent is equal to $90,000? (Do not round your intermediate calculations, round final answer to nearest whole dollar amount.) $34,000 $44,412 $14,238

None of these answers is correct.