Question
LC Corp. has an old machine with variable costs of $164,200 per year. LC is looking at two replacement options. Option A costs $210,000 and
LC Corp. has an old machine with variable costs of $164,200 per year. LC is looking at two replacement options. Option A costs $210,000 and has $118,000 per year in variable costs. Option B costs $216,000 and has $114,400 in per year variable costs. All machines have a six year life. The old machine will sell for $19,200. Which of the following lists LCs options from least costly to most costly?
A : Retaining the old machine is least costly, followed by option B, then option A.
B :Option B is least costly, followed by option A, then retaining the old machine.
C :Retaining the old machine is least costly, followed by option A, then option B.
D :Option A is the least costly, followed by option B, then retaining the old machine.
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