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Hi! each question below has an answer (Bold). Could you please explain to me why those are the answers and why the others (each) are
Hi! each question below has an answer (Bold). Could you please explain to me why those are the answers and why the others (each) are wrong? I am preparing for my final and just want to make sure I really understand why and why not of each of them. Thanks.
9) Dinkins Inc. is considering disposing of a machine with a book value of $50,000 and an estimated remaining life of five years. The old machine can be sold for $15,000. A new machine with a purchase price of $150,000 is being considered as a replacement. It will have a useful life of five years and no residual value. It is estimated that variable manufacturing costs will be reduced from $70,000 to $45,000 if the new machine is purchased. The net differential increase or decrease in cost for the entire five years for the new equipment is. *a) $10,000 increase b) $25,000 decrease c) $10,000 decrease d) $25,000 increase 10) A business received an offer from an exporter for 10,000 units of product at $13.50 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 $21 Unit manufacturing costs: Variable Fixed What is the amount of the gain or loss from acceptance of the offer? a) $75,000 loss b) $40,000 gain *c) $15,000 gain d) $85,000 gainStep by Step Solution
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