Starling Co

question 156

Multiple Choice

Starling Co. is considering disposing of a machine with a book value of $12,500 and estimated remaining life of five years. The old machine can be sold for $1,500. A new high-speed machine can be purchased at a cost of $25,000. It will have a useful life of five years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $26,000 to $23,500 if the new machine is purchased. The differential effect on income for the new machine for the entire five years is a (n)

• A) decrease of $11,000
• B) decrease of $15,000
• C) increase of $11,000
• D) increase of $15,000

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Definitions:

Witness

A person who sees an event, typically a crime or accident, take place and can provide a firsthand account of what happened.

Memory

The cognitive process involving the encoding, storage, and retrieval of information over time.

Serial Position Effect

A psychological phenomenon where people tend to recall the first and last items in a list better than the middle items.

Presentation

The act of showing, displaying, or delivering information or data to an audience through various means such as speeches, demonstrations, or multimedia.