Question 1 the cost to produce part a was 20 per unit in, Ask an Expert

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Question 1: The cost to produce Part A was $20 per unit in 2012. During 2013, it has increased to $23 per unit. In 2013, Supplier Company has offered to supply Part A for $18 per unit. For the make-or-buy decision,

a)incremental revenues are $5 per unit.

b)net relevant costs are $3 per unit.

c)differential costs are $5 per unit.

d)incremental costs are $3 per unit.

Question 2: Sala Co. is contemplating the replacement of an old machine with a new one. The following information has been gathered:

	Old Machine	New Machine
Price	$300,000	$600,000
Accumulated Depreciation	90,000	-0-
Remaining useful life	10 years	-0-
Useful life	-0-	10 years
Annual operating costs	$240,000	$180,600

If the old machine is replaced, it can be sold for $24,000.

Which of the following amounts is relevant to the replacement decision?

$300,000

$59,400

$210,000

$90,000

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9957685

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