JB Lumber Corporation Is Downsizing Operations and Has to Decide

question 21

Multiple Choice

JB Lumber Corporation is downsizing operations and has to decide which of its large saws should be sold.JB currently has four saws but only needs to keep three.All four saws have a remaining useful life of 3 years and will all have a salvage value of zero at the end of those 3 years.Also,all four saws have equal annual operating costs and output efficiency.Information related to the four saws is provided below: In order to maximize profits for the next three years,which machine would be most beneficial for JB to sell?

• A)1
• B)2
• C)3

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Definitions:

Economic Thinking

An approach to analyzing problems that considers the allocation of scarce resources and the trade-offs involved in decisions.

Additional Benefits

Extra advantages or positive outcomes that accompany a primary benefit or result.

Marginal Cost

The financial outlay required to produce an additional unit of a good or service.

Gasoline

A transparent, petroleum-derived liquid that is used primarily as a fuel in most spark-ignited internal combustion engines.