Question

20 poin Aswaq Enterprises usca a computer to handlo its saes involcos. Lately, with the volume of sales invoieas business hss beon so good that it takes an eetra 3 hours par night, plus owery third Saturcty, to kecp elminate ail of the cvartime proceasing Original purchase oot$15.000 6,000 $25,000 ocumdited depreciation 25,00020.000 6 yoars tt the oompany dicidees to buy the new machine the old machine can be sold for $5 00 nd an addisonal sales revar a a($10,000 can be generated ovor the 6 yeses Both machines are expected to have a zero savage value at the end of their useful lite. Instructions: a. Fil in the following inaremental analysis table to help the management decide whether to netain he cument computer or replace t with the new one. Retain (id Computer Replace Old Camputer Increase (Decrease) in Net New computer cost Operaling custs Sale of old oomputer Additional sales revenae Tocal enst b. Based on the rasuts of your sbove incremental analyais, should the mansgiement replace the ourront computr Enter Y for "Yes" or N for No*: c. The original purchase cost of thơ current computer is not releurt in the incromontal nly覬What is the type of this cost? Click Save and Submit to save and swhmit, Click Save All Answers to soze all anste

Answer 1

a.

	Retain Old Computer $	Replace Old Computer $	Increase (Decrease) in Net Income $
New computer cost	0	25000	-25000
Operating costs	150000	120000	30000
Sale of old computer	0	-5000	5000
Additional sales revenue	0	-10000	10000
Total cost	150000	130000	20000

b. Y

c. Sunk cost