When making keep or replace decisions, management should consider the: (Check all that apply.)Multiple select question.sale of the existing equipmentoriginal cost of the existing equipmentvariable manufacturing cost of the existing equipmentvariable manufacturing cost of the new equipmentbook value of the existing equipment

Multiple Choice QuestionA company purchased manufacturing equipment 5 years ago for $50,000. Book value is currently $5,000 and the remaining useful life is 3 years. The equipment incurs variable manufacturing costs of $30,000. The company is considering replacing the equipment. The new equipment will cost $75,000, have a useful life of 3 years, and is more efficient and, therefore, only costs $10,000 in variable manufacturing costs to operate each year. The vendor is willing to accept the old equipment with a selling price of $20,000. The company should:Multiple choice question.keep the old equipment because the total net increase in income will be $5,000replace the old equipment because the total net increase in income will be $5,000replace the old equipment because the total net decrease in income will be $5,000keep the old equipment because replacing it will decrease income by $5,000 if they purchase the new equipment

In a make or buy decision, management should consider: (Check all that apply.)Multiple select question.Existing salesSunk costsWorkloadIncremental costsEmployee moraleproduct quality

Choose the correct term from the options provided to match the following descriptions:Costs that remain constant regardless of the number of units produced and sold.Answer 1The total gain or loss on an investment over a given period.Answer 2An inventory that was purchased with the intention to sell it again in unaltered form.Answer 3The costs relating to the preparation and processing of purchasing documentation, as well as receiving and inspecting purchased items.Answer 4The term used where the remuneration paid to employees could vary from one period to the next.Answer 5The company’s plan that will contain statements about its mission, vision, values, key strategies and long-term objectives.Answer 6The manufacturing costs that we can easily trace to the products manufactured.Answer 7A factory’s average level of activity for meeting the company’s production demands, considering expected interruptions and seasonal fluctuations.Answer 8This method treats all manufacturing costs (i.e. direct materials, direct labour as well as fixed and variable factory overheads) as product costs.Answer 9The principle that an amount of money is worth more today than the same amount of money will be worth in the future.Answer 10

Multiple Choice QuestionRefer to Figure 16.1. Which one of these choices represents the highest risk for a business?Multiple choice question.Repair existing equipmentBuy new equipmentAdd to a product lineExpand into a new market

Multiple Select QuestionSelect all that applyIn a make or buy decision, management should consider: (Check all that apply.)Multiple select question.Existing salesproduct qualitySunk costsIncremental costsWorkloadEmployee morale