Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Capital Budgeting: Dafina Instrument Company The management of Dafina Instrument Company (SDI) is considering the purchase of a new robotic machine, the RoboSP model. According

Capital Budgeting: Dafina Instrument Company

The management of Dafina Instrument Company (SDI) is considering the purchase of a new robotic machine, the RoboSP model. According to the specifications and test results, RoboSP will significantly increase the productivity of the AccuX model, the machine currently used by SDI.

AccuX, acquired 8 years ago with a purchase price of RM120,000 and depreciated over 10 years of age with a residual value of RM20,000. The Engineering Department expects the AccuX to be usable for another three years of major overhauls made at the end of its useful life. The estimated cost of the repair is RM100,000. Machines that have been repaired will be depreciated using the straight line method with no residual value. This overhaul will increase the operating efficiency of the machine by approximately 20%. No more operating conditions are affected by this overhaul.

RoboSP is sold for RM250,000. The installation, testing and training of this machine requires an additional cost of RM30,000. The manufacturer is willing to trade on AccuX for RM40,000. RoboSP will be depreciated using the straight line method with no residual value. The emergence of new technologies will result in the obsolescence of RoboSP to the firm within five years.

The variable operating cost for both machines is the same at RM10 per hour. Other information is as follows:

image text in transcribed
AccuX Robo SP Output units (per year) 10,000 10.000 Engine clock 8,000 4.000 Selling price per unit RM100 RM100 Variable production costs (excluding machine hours) RM40 RM40 Other annual expenses (equipment and supervision) RM95,000 RM55.000 Disposal value - present RM25,000 Disposal value - in five years 0 RM50.000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Government and Not-for-Profit Accounting Concepts and Practices

Authors: Michael H. Granof, Saleha B. Khumawala, Thad D. Calabrese, Daniel L. Smith

8th edition

1119495814, 1119495857, 1119495819, 9781119495819 , 978-1119495857

More Books

Students also viewed these Accounting questions

Question

Solve the followinggame: 0825 5240

Answered: 1 week ago

Question

Assign cultural arts consumers to typologies of engagement. P-968

Answered: 1 week ago

Question

5. Give examples of binary thinking.

Answered: 1 week ago