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I am not sure if i did this right. Please help! Gull Corp. is considering selling its old popcorn machine and replacing it with a
I am not sure if i did this right. Please help!
Gull Corp. is considering selling its old popcorn machine and replacing it with a newer one. The old machine has a book value of $5,000, and its remaining useful life is five years. Annual costs are $4,000. A high school is willing to buy it for $2,000. New equipment would cost $18,000 with annual operating costs of $1,500. The new machine has an estimated useful life of five years. Prepare a differential analysis. If an amount is zero, enter "O". If required, use a minus sign to indicate a loss. Differential Analysis Continue with (Alternative 1) or Replace (Alternative 2) Old Machine Continue with Replace Old Differential Old Machine Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine $ 2,000 $ 2,000 Costs: Purchase price -18,000 -18,000 Variable manufacturing costs (5 years) -20,000 -7,500 12,500 Profit (loss) -20,000 -23,500 -3,500 Should the machine be replaced? No Schedule of Activity Costs Quality Control Activities Activity Cost Process audits $48,900 Training of machine operators Processing returned products Scrap processing (disposal) 25,900 20,000 26,100 Rework 6,000 Preventative maintenance 28,300 Product design 45,300 7,300 Warranty work Finished goods inspection 22,200 From the provided schedule of activity costs, determine the total activity cost. Oa. $230,000 Ob. $153,600 Oc. $278,300 Od. $101,000Step by Step Solution
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