Which of the following is an example of a sunk cost? Select one: A. $1,500 of lost sales because an item was out of stock. B. $20,000 project that must be forfeited if another project is accepted. C. $1,800 increase in comic book sales if a store ceases selling puzzles. D. $4,500 reduction in current shoe sales if a store commences selling sandals. E. $1,200 paid to repair a machine last year.

Which of the following is an example of a sunk cost? Select one: A. $1,500 of lost sales because an item was out of stock. B. $20,000 project that must be forfeited if another project is accepted. C. $1,800 increase in comic book sales if a store ceases selling puzzles. D. $4,500 reduction in current shoe sales if a store commences selling sandals. E. $1,200 paid to repair a machine last year.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter6: Statistical Inference

Section: Chapter Questions

Problem 24P: The manager of an automobile dealership is considering a new bonus plan designed to increase sales...

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Which of the following is an example of a sunk cost? Select one: a. The firm pays to replant trees following the clear cutting of 1,000 acres during a timber harvest. b. The firm spends $20 million on heart medication research and discovers a promising drug. c. The firm replaces a piece of manufacturing equipment to maintain current manufacturing capacity. d. A bank opens a new office, and the new office leads to a decline in deposits at the bank's other offices. e. All of the above are examples of sunk costs.
An auto repair company needs a new machine that will check for defective sensors. The machine has an Initial investment of $224,000. Incremental revenues, including cost savings, are $120,000, and Incremental expenses, including depreciation, are $50,000. There is no salvage value. What is the accounting rate of return (ARR)?
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Sami Inc. has some material that originally cost $68,400. The material has a scrap value of $30,100 as is, but if reworked at a cost of $1,400, it could be sold for $30,800. What would be the incremental effect on the company's overall profit of reworking and selling the material rather than selling it as is as scrap? A. -$69,100 B. -$700 C. $29,400 D. -$39,000
The management of a high-rise office building uses 3,000 square feet of space in the building for its own administrative functions. This space could be rented for P50,000. What economic term describes this P50,000 of lost rental revenue? Average cost Out of pocket cost Sunk cost Opportunity cost
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6. The Lantern Corporation has 1,000 obsolete lanterms that are carried in inventory at a manufacturing cost of P20,000. If the lanterns are re-machined for PS,000, they could be sold for P9,000. If the lanterns are scrapped, they could be sold for P1,000. What alternative is more desirable and what are the total relevant costs for the alternative? a. Re-machine and PS,000. b. Re-machine and P25,000. c. Scrap and P20,000. d. Neither, as there is an overall loss under either altematives.
A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000; variable expenses total $340,000. Fixed expenses charged to the product total $210,000. The company estimates that $60,000 of these fixed expenses are not avoidable even if the product is dropped. If Product A is dropped, the annual financial advantage (disadvantage) for the company of eliminating this product should be: Multiple Choice ($10,000) $10,000 ($50,000) $50,000 Next
A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000; variable expenses total $340,000. Fixed expenses charged to the product total $210,000. The company estimates that $60,000 of these fixed expenses are not avoidable even if the product is dropped. If Product A is dropped, the annual financial advantage (disadvantage) for the company of eliminating this product should be: Multiple Choice ($10,000) $50,000 ($50,000) $10,000
1. Your company has a customer who is shutting down a production line, and it is your responsibility to dispose of the extrusion machine. The company could keep it in inventory for a possible future product and estimates that the reservation value is $100,000. Your dealings on the secondhand market lead you to believe that if you commit to a price of $200,000, there is a 0.5 chance you will be able to sell the machine. If you commit to a price of $300,000, there is a 0.2 chance you will be able to sell the machine. If you commit to a price of $400,000, there is a 0.15 chance you will be able to sell the machine. These probabilities are summarized in the following table. For each posted price, enter the expected value of attempting to sell the machine at that price. (Hint: Be sure to take into account the value of the machine to your company in the event that you are not be able to sell the machine.) Posted Price Probability of Sale Expected Value ($) ($) $400,000 0.15 $300,000 0.2…
6. The Lanterm Corporation has 1,000 obsolete lanterns that are carried in inventory at a manufacturing cost of P20,000. If the lanterns are re-machined for P5,000, they could be sold for P9,000. Ifthe lanterns are scrapped, they could be sold for P1,000. What alternative is more desirable and what are the total relevant costs for the alternative? a. Re-machine and P5,000. b. Re-machine and P25,000. c. Scrap and P20,000. d. Neither, as there is an overall loss under either alternatives. < O O
A piece of production equipment is to be replaced immediately because it no longer meets quality requirements for the end product. The two best alternatives are a used piece of equipment (E1) and a new automated model (E2). The economic estimates for Alt E1 Alt E2 Capital Investment PhP 14,000 PhP 65,000 Aппual Expenses 14,000 9,000 each are shown in the accompanying table. Useful Life (years) 5 20 Market Value (at the end of useful life) 8,000 13,000 The MARR is 15% per year. Which alternative is preferred, based on the (a) coterminated assumption with a five-year study period and an imputed market value for Alternative b? Use FW. ANSWER: FW (E1) = PhP Blank 1 FW (E2) = PhP Blank 2 The best alternative is EBlank 3