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

question 46

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 sunk cost was:

• A) $545,000
• B) $450,000
• C) $527,000
• D) $532,000

---

Definitions:

Customer Satisfaction

The measure of how products or services provided by a company meet or surpass customer expectation.

Production Era

A historical period in business thought where the focus was primarily on production efficiency and manufacturing output, often at the expense of customer needs or desires.

Consumer Demand

The desire of purchasers for products or services that they are willing and able to buy at given prices.

New Strategies

Innovative approaches and plans developed to achieve specific goals or solve problems, often in response to changes in the environment or industry trends.