North Division has the following information:Oriole, Inc. can produce $100$ units of a component part with the following costs:Sleek Looks has been using the same machines to make its name brand clothing for the last five years. A cost efficiency consultant has

suggested that production costs may be reduced by purchasing more technologically advanced machinery. The old machines cost the

company $$100,000.$ The old machines presently have a book value of $$60,000$ and a market value of $$6,000.$ They are expected to have

a five$-$year remaining life and zero salvage value. The new machines would cost the company $$50,000$ and have operating expenses of

$$9,000$ a year. The new machines are expected to have a five$-$year useful life and no salvage value. The operating expenses associated

with the old machines are $$15,000$ a year. The new machines are expected to increase quality, justifying a price increase, and thereby

increasing sales revenue by $$5,000$ a year. Which of the following statements is true?

The company will be $$20,000$ better off over the $5-$year period if it keeps the old equipment.

The company will be $$12,000$ better off over the $5-$year period if it replaces the old equipment.

The company will be $$11,000$ better off over the $5-$year period if it replaces the old equipment.

The company will be $$6,000$ better off over the $5-$year period if it replaces the old equipment.

If Oriole Inc. can purchase the component externally for $$87500$ and only $$7800$ of the fixed costs can be avoided, what is the correct

"make$-$or$-$buy decision"?

Make and save $$4700.$

Make and save $$1000.$

Buy and save $$12500.$

Buy and save $$1000.$

Variable costs $,324000$

Fixed costs $,417000$

If this division is eliminated, the fixed costs will be allocated to the company's other divisions. What is the incremental effect on net

income if the division is dropped?

$$266000$ decrease

$$173000$ increase

$$151000$ increase

$$417000$ decrease