Starling Co

question 96

Multiple Choice

Starling Co. is considering disposing of a machine with a book value of $12,500 and estimated remaining life of five years. The old machine can be sold for $1,500. A new high-speed machine can be purchased at a cost of $25,000. It will have a useful life of five years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $26,000 to $23,500 if the new machine is purchased. The total net differential increase or decrease in cost for the new equipment for the entire five years is:

• A) decrease of $11,000
• B) decrease of $15,000
• C) increase of $11,000
• D) increase of $15,000

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Definitions:

Socialization Tactics

The strategies and methods used by an organization to integrate, acculturate, and train new members.

Cultural Change

Transformation in the values, norms, customs, and practices of a group or society over time.

Competitive Advantage

A condition or circumstance that puts a company in a favourable or superior business position compared to its competitors.

Adaptive and Flexible

The capacity to adjust and modify one’s behavior or operations in response to changing circumstances or environments.