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:

Sophisticated Information Technology

Advanced systems and tools that manage, process, and disseminate large volumes of data efficiently, supporting complex analysis and decisions.

Supply Chain Manager

A professional responsible for overseeing and managing the entire supply chain operations to ensure efficiency, cost-effectiveness, and timely delivery of goods or services.

Automobile Industry

A sector of the economy that encompasses a wide range of companies and organizations involved in the design, development, manufacturing, marketing, and selling of motor vehicles.

Responsive Supply Chains

Supply chains designed to quickly respond to market changes and customer demands with agility and efficiency.