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Requirement 1 and 2. Which of the costs and benefits above are relevant to the decision to replace the oven? What information is irrelevant?
Requirement 1 and 2. Which of the costs and benefits above are relevant to the decision to replace the oven? What information is irrelevant? Why is it irrelevant? Begin by determining whether each item is relevant or irrelevant for this decision. If an item is irrelevant, select why it is irrelevant. (Make a selection for each item in the Old Oven and New Oven columns. In the "Why Irrelevant" column, only make a selection for irrelevant items. For relevant items, leave the input field blank; do not select a label.) Original cost Accumulated depreciation Book value Current disposal value Installation cost Old Oven New Oven Why Irrelevant Annual operating cost Terminal disposal value Which of the costs and benefits above are relevant to the decision to replace the oven? What information is irrelevant? Why is it irrelevant? Should Oma's Bakery purchase the new oven? Provide support for your answer. Is there any conflict between the decision model and the incentives of the manager who has purchased the "old" oven and is considering replacing it only 2 years later? At what purchase price would Oma's Bakery be indifferent between purchasing the new oven and continuing to use the old oven? Current disposal value (market value) Original cost (purchase price) Installation cost Operating cost for 7 years otal relevant costs Keep old oven Total New oven Total
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