Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Rory Company has an old machine with a book value of ( $ 75,000 ) and a remaining five-year useful life. Rory is considering purchasing
Rory Company has an old machine with a book value of \\( \\$ 75,000 \\) and a remaining five-year useful life. Rory is considering purchasing a new machine at a price of \\( \\$ 102,000 \\). Rory can sell its old machine now for \\( \\$ 89,000 \\). The old machine has variable manufacturing costs of \\( \\$ 31,000 \\) per year. The new machine will reduce variable manufacturing costs by \\( \\$ 12,400 \\) per year over its five-year useful life. (a) Prepare a keep or replace analysis of income effects for the machines. (b) Should the old machine be replaced? Complete this question by entering your answers in the tabs below. Should the old machine be replaced? Radar Company sells bikes for \\( \\$ 540 \\) each. The company currently sells 4,400 bikes per year and could make as many as 4,750 bikes per year. The bikes cost \\( \\$ 230 \\) each to make: \\( \\$ 165 \\) in variable costs per bike and \\( \\$ 65 \\) of fixed costs per bike. Radar receives an offer from a potential customer who wants to buy 350 bikes for \\( \\$ 510 \\) each. Incremental fixed costs to make this order are \\( \\$ 100 \\) per bike. No other costs will change if this order is accepted. (a) Compute the income for the special offer. (b) Should Radar accept this offer
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started