25,000 25,000 Utilities 1,000 800 Supplies 2,000 2,000 Maintenance 3,000 2,500 Salvage value (in 7 years) 5,000 8,000 Required: 1. Which costs are irrelevant? 2. Which system should Marita purchase? (Ignore the time value of money.) Support your decision with numbers. Problem 16 Emma Eastwing is considering the purchase of a computer for her accounting practice. Two alternatives are being considered as follows: A B Cost $10,000 $12,000 Salvage value $ 1,000 $ 2,000 Expected useful life 3 years 3 years Utilities (annual) $ 1,000 $ 800 Operator labor (annual) $25,000 $25,000 Repairs (annual) $ 1,000 $ 900 Supplies (annual) $ 2,000 $ 2,000 Required: 1. Which costs are sunk? 2. Which costs are irrelevant? 3. Prepare a comparative cost analysis for the two alternatives. Ignore the time value of money and taxes. Include only relevant costs. 4. Which alternative do you recommend purchasing? Why? Problem 17 The unallocated income statement of Harper Inn is shown below: Unallocated Income Statement Harper Inn For the month of January 20X4 Rooms Food Revenue $70,000 $30,000 Cost of Sales 0 12,000 Labor Costs and Related Expenses 16,000 10,000 6,000 Total $100,000 12,000 26,000 Other Direct Expenses 4,000 10,000