Derwood Company Is Considering Replacing a Machine That Is Presently

question 37

Multiple Choice

Derwood Company is considering replacing a machine that is presently used in the production of its product. The following data are available: $$\begin{array} { l l l } & \text { Old Machine } & \begin{array} { l } \text { R eplacem } \\\text { M achine }\end{array} \\\text { Original cost } & \$ 99,000 & \$ 88,000 \\\text { Useful life in years } & 9 & 6 \\\text { Current age in years } & 3 & 0 \\\text { Book value } & \$ 33,000 & - \\\text { Disposal value now } & \$ 28,000 & - \\\text { Disposal value in 5 years } & 0 & 0 \\\text { Annual cash operating costs } & \$ 17,000 & \$ 14,000\end{array}$$ is a sunk cost.

• A) The disposal value of the old machine
• B) The original cost of the old machine
• C) The annual cash operating costs of the replacement machine
• D) The annual cash operating costs of the old machine

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Definitions:

Moral Development

The process through which individuals develop their understanding of morality, ethical behaviors, and the distinction between right and wrong through various stages of life.

Kohlberg

Refers to Lawrence Kohlberg, a psychologist best known for his theory of stages of moral development.

Reciprocity

A principle of mutual exchange where actions or benefits provided by one party are returned by the other, fostering cooperation and fairness.

Human Resource Activities

Actions and processes carried out by the HR department, such as recruitment, training, and managing employee relations.