Berkman Company Is Considering the Purchase of New Equipment to Replace

question 134

Multiple Choice

Berkman Company is considering the purchase of new equipment to replace one-year-old equipment that is not achieving the expected results.The following information is available: $$\begin{array} { l l } \text { Expected maintenance costs of new machine } & \$ 13,000 \text { per year } \\\text { Purchase price of existing machine } & \$ 160,000 \\\text { Expected cost savings of new machine } & \$ 30,000 \text { per year } \\\text { Expected maintenance costs of exi sting machine } & \$ 8,000 \text { per year } \\\text { Resale value of existing machine } & \$ 45,000\end{array}$$ Which of these items is NOT relevant to this decision?

• A) the expected maintenance costs of the new machine
• B) the purchase cost of the existing machine
• C) the expected maintenance costs of the existing machine
• D) the expected resale value of the existing machine

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Definitions:

Product Tampering

The act of deliberately altering or contaminating a product in a way that is intended to cause harm or distress.

Hostage Taking

The illegal act of capturing and holding individuals against their will, often to procure ransom or fulfill demands.

Satisficing

A decision-making strategy that aims for a satisfactory or adequate result, rather than the optimal solution.

Alternative Solutions

are different options or approaches considered in problem-solving or decision-making processes.