A Company Decided to Replace an Old Machine with a New

question 38

Multiple Choice

A company decided to replace an old machine with a new machine. Which of the following is considered a relevant cost?

• A) the book value of the old equipment
• B) the depreciation expense on the old equipment
• C) the loss on the disposal of the old equipment
• D) the setup cost of the new equipment

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Definitions:

Competitiveness

The ability of a company, country, or product to compete effectively and successfully in the marketplace.

Residual Income

The income that remains after all required costs of capital and operating expenses have been paid.

Return on Investment

A financial ratio that calculates the profitability of an investment by dividing the profit from the investment by the cost of the investment.

Goal Congruence

The alignment of individual, team, or department goals with the overall objectives of the organization to ensure everyone is working towards the same outcomes.