QUESTION 9 Chaz Bert and Nan Associatos Inc is considering

QUESTION 9 Chaz, Bert, and Nan, & Associatos, Inc. is considering the replacement of a computer system with a newer model. The following data has been collected New Computer Purchase Price Annual Operating cost If the old computer is replaced now, it can be sold for $60,000. Both the old computer\'s remaining usoful life and the newcomputer\'s usoful life in 5 years. The net advantage (disadvantage) of replacing the old computer with the new computer is o $60,000 ?$(15,000) 225,000 90,000 300,000 375,000 0- 240,000 $(75,000) $90,000

Solution

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Old computer New Computer Differential Purchase cost                                -                375,000.00       (375,000.00) Sale Value              (60,000.00)            60,000.00 Operating cost Old = 300,000 * 5 New = 240,000*5           1,500,000.00          1,200,000.00         300,000.00 Total cost           1,500,000.00          1,515,000.00         (15,000.00) The net disadvantage of replacing the old computer with new computer is $(15,000) Statement showing computations Particulars Product A Selling price after further processing                         14.00 Selling price at split off point                            8.00 Incremental revenue per pound or gallon                            6.00 Total Output                 24,000.00 Total Incremental Revenue               144,000.00 Total Incremental Processing costs               160,000.00 Total Incremental profit or loss               (16,000.00) Sell now company will be better off by $16,000