Fuller Industries Is Considering Replacing a Machine That Is Presently

question 176

Multiple Choice

Fuller Industries is considering replacing a machine that is presently used in its production process. Which of the following amounts represents a sunk cost? $\begin{array}{|l|r|r|} \hline& \text { Old Machine } & \begin{array}{c}\text { Replacement } \\\text { Machine }\end{array} \\\hline \text { Original cost } & \$ 60,000 & \$ 46,000 \\\hline \text { Remaining useful life in years } & 5 & 5 \\\hline \text { Current age in years } & 5& 0 \\\hline \text { Book value } &\$ 33,000 \\\hline \text { Current disposal value in cash } & \$ 9000 & \\\hline \text { Future disposal value in cash (in 5 years) } & \$ 0 & \$ 0 \\\hline \text { Annual cash operating costs } & \$ 8000 & \$ 4000\\\hline\end{array}$

• A) $60,000
• B) $33,000
• C) $9000
• D) $46,000

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