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

question 51

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 220 machine rather than the model 370 machine,the differential cost was:

• A) $20,000
• B) $8,000
• C) $12,000
• D) $63,000

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Definitions:

Embedded Response

A type of answer or reaction that is included or hidden within a larger message or context.

Reflection Response

A communication technique used in counseling and interpersonal communication where the listener repeats or paraphrases what the speaker has said to show understanding and empathy.

Closed-ended Question

A question format that limits responses to a set of choices, typically "yes" or "no," or multiple choice, providing clear and straightforward answers.

Challenging

Engaging in behavior or dialogue that questions, confronts, or tests the ideas, beliefs, or statements of others, often to provoke thought or promote change.