Q1. Yasmin Company acquired an appliance 7 years ago for $319,000 when it started product P50. Unfortunately, this appliance has broken down and cannot be repaired. The appliance could be replaced by a new model 300 costing $313,000 or by a new model 200 costing $275,000. Management has decided to buy the model 200. It has less capacity than the model 300, but its capacity is sufficient to continue making product P50. Management also considered, but rejected, the alternative of dropping product P50 and not replacing the old appliance. If that were done, the $275,000 invested in the new appliance could instead have been invested in a project that would have returned a total of $374,000.

Required: 1. What is the total differential cost regarding the decision to buy the model 200 appliance rather than the model 300 appliance? 2. What is the total sunk cost regarding the decision to buy the model 200 rather than the model 300? 3. What is the total opportunity cost regarding the decision to invest in the model 200?