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Spicer Company is contemplating the replacement of an old machine with a new one. The following information has been gathered:
Old Machine New Machine
Price $390,000 $530,000
Accumulated Depreciation 180,000 -0-
Remaining useful life 6years -0-
Useful life -0- 10 years
Annual operating costs $ 167,000 $ 151,500
If the old machine is replaced, it can be sold for $120,000.
Which of the following amounts is a sunk cost? (select one)
a- $151,500
b- $180,000
c- $210,000
d- $167,000

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Respuesta :

Answer:

c- $210,000

Explanation:

The computation of the sunk cost is as follows:

= Old machine prie - accumulated depreciation of old machine

= $390,000 - $180,000

= $210,000

Hence, the sunk cost is $210,000

Therefore the option c is correct

The same is to be considered

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