Management and Cost Accounting

Question:

Consider the following data regarding Speed Print's photocopying requirements:

	Old Photocopier	Proposed Replacement Photocopier
Useful life, in years	5	3
Current age, in years	2	0
Useful life remaining, in years	3	3
Original cost	$25,000	$15,000
Accumulated depreciation	$10,000	$0
Book value	$15,000	Not acquired yet
Disposal value (in cash) now	$7,000	Not acquired yet
Disposal value in 3 years	$0	$0
Annual cash operating costs for power, maintenance, toner, and supplies	$14,000	$8,000

Required:

(a) Analyze in detail the relevant and irrelevant costs related to keeping or replacing the old photocopier.

(b) Advise the company on what it should do (keep or replace the old photocopier)? Please explain clearly why?

Note:

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