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The manager at the Doughnut Factory is considering replacing the old doughnut machine with a newer ...

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The manager at the Doughnut Factory is considering replacing the old doughnut machine with a newer ...

The manager at the Doughnut Factory is considering replacing the old doughnut machine with a newer model. The managerial accountant provided the following information:

      Old Machine   Replacement Machine
Original Cost   $1,200,000   $800,000
Useful life in years   6   3
Current age in years   4   0
Remaining useful life
Accumulated depreciation   $700,000   Not yet acquired
Book value   $500,000   Not yet acquired
Current disposal value, cash   $60,000   Not yet acquired
Terminal disposal value (2 years)    $0   $0
Annual operating costs, maintenance,   $900,000   $560,000
   energy, repairs, and coolants

Required:
Discuss whether the following costs are relevant or irrelevant costs:
   Book value
   Current disposal value on old machine
   Cost of new machine

Textbook

Managerial Accounting: Decision Making and Motivating Performance

Edition: 1^st

Authors: Datar, Rajan

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Onxy Author

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7 years ago

Thanks

kriggs62

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I appreciate what you did here, answered it right Smiling Face with Open Mouth

DAGINC

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Brilliant ツ

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