Question
Shao Company has spent $134,000 on research developing a new type of sneaker. For this sneaker to now be manufactured, the firm will need to
Shao Company has spent $134,000 on research developing a new type of sneaker. For this sneaker to now be manufactured, the firm will need to expand into an empty building that it currently owns. Another company offered $229,000 last week to purchase that building. It will cost Shao Company $342,000 for new equipment and building improvements. Labor and material costs are estimated at $4.98 per pair of shoes. Interest expense on the loan needed to finance the production of this new shoe will be $17,800 a year. Which one of these correctly identifies the sunk costs?.
A.$229,000 value of the building. | ||
B. $134,000 for research. | ||
C.$229,000 value of the building plus $342,000 for new equipment and improvements. | ||
D. $17,800 for interest plus $134,000 for research. | ||
E.$229,000 for the building plus $134,000 for research. |
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