Dominik Corporation Purchased a Machine 5 Years Ago for $527,000

question 52

Multiple Choice

Dominik Corporation purchased a machine 5 years ago for $527,000 when it launched product M08Y. Unfortunately, this machine has broken down and cannot be repaired. The machine could be replaced by a new model 310 machine costing $545,000 or by a new model 240 machine costing $450,000. Management has decided to buy the model 240 machine. It has less capacity than the model 310 machine, but its capacity is sufficient to continue making product M08Y. Management also considered, but rejected, the alternative of dropping product M08Y and not replacing the old machine. If that were done, the $450,000 invested in the new machine could instead have been invested in a project that would have returned a total of $532,000.In making the decision to buy the model 240 machine rather than the model 310 machine, the differential cost was:

• A) $95,000
• B) $5,000
• C) $77,000
• D) $18,000

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Definitions:

Fluid Balance

The maintenance of the proper amount of fluid in the body, crucial for the body's physiological functions.

Scar Tissue

Fibrous tissue that replaces normal tissue after an injury, often resulting in a mark on the skin or internal tissue.

Antibiotics

Drugs used to fight bacterial infections by either killing bacteria directly or inhibiting their growth.

Open Wound

An injury involving an external or internal break in body tissue, usually involving the skin.