Multiple Select QuestionSelect all that applyWhen making keep or replace decisions, management should consider the: (Check all that apply.)Multiple select question.variable manufacturing cost of the new equipmentoriginal cost of the existing equipmentsale of the existing equipmentvariable manufacturing cost of the existing equipmentbook value of the existing equipment
Question
Multiple Select QuestionSelect all that applyWhen making keep or replace decisions, management should consider the: (Check all that apply.)Multiple select question.variable manufacturing cost of the new equipmentoriginal cost of the existing equipmentsale of the existing equipmentvariable manufacturing cost of the existing equipmentbook value of the existing equipment
Solution
When making keep or replace decisions, management should consider the:
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Variable manufacturing cost of the new equipment: This is important as it will impact the overall cost of production. If the new equipment can produce the same output at a lower cost, it may be a good decision to replace the existing equipment.
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Sale of the existing equipment: The proceeds from the sale of the existing equipment can offset some of the costs of the new equipment. This should be considered in the decision-making process.
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Variable manufacturing cost of the existing equipment: This is the cost associated with producing each unit of output with the existing equipment. If the new equipment can produce the same output at a lower cost, it may be a good decision to replace the existing equipment.
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Book value of the existing equipment: This is the value of the equipment as recorded in the company's books. It is the original cost of the equipment less any accumulated depreciation. If the book value is significantly lower than the cost of the new equipment, it may be a good decision to keep the existing equipment.
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