9. Assume that Darrow Co. is considering disposing of equipment that cost $50,000 and has $40,000 of accumulated depreciation to date. Darrow Co. can sell the equipment through a broker for $25,000 less 5% commission. Alternatively, Minton Co. has offered to lease the equipment for five years for a total of $48,750. Darrow will incur repair, insurance, and property tax expenses estimated at $10,000. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is: $15,000 b. 5,000 $25,000 d. $12,500 a. C. | 10. Frank Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $5 a unit. The unit cost for Frank Co. to make the part is $6, which includes $.40 of fixed costs. If 4,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it? $12,000 cost decrease b. $20,000 cost increase $20,000 cost decrease d. $2,400 cost increase a. c. | 11. Benson 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 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 decrease of $11,000 b. decrease of $15,000 increase of $11,000 d. increase of $15,000 a c. 12. Sorrentino Inc. is considering disposing of a machine with a book value of s22,500 and an estimated remaining life of three years. The old machine can be sold for $6,250. A new machine with a purchase price of $68,750 is being considered as a replaceme
9. Assume that Darrow Co. is considering disposing of equipment that
9. Assume that Darrow Co. is considering disposing of equipment that cost $50,000 and has $40,000 of accumulated depreciation to date. Darrow Co. can sell the equipment through a broker for $25,000 less 5% commission. Alternatively, Minton Co. has offered to lease the equipment for five years for a total of $48,750. Darrow will incur repair, insurance, and property tax expenses estimated at $10,000. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is: $15,000 b. 5,000 $25,000 d. $12,500 a. C. | 10. Frank Co. is currently operating at 80% of capacity and is currently purchasing a part used in its manufacturing operations for $5 a unit. The unit cost for Frank Co. to make the part is $6, which includes $.40 of fixed costs. If 4,000 units of the part are normally purchased each year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease for making the part rather than purchasing it? $12,000 cost decrease b. $20,000 cost increase $20,000 cost decrease d. $2,400 cost increase a. c. | 11. Benson 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 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 decrease of $11,000 b. decrease of $15,000 increase of $11,000 d. increase of $15,000 a c. 12. Sorrentino Inc. is considering disposing of a machine with a book value of s22,500 and an estimated remaining life of three years. The old machine can be sold for $6,250. A new machine with a purchase price of $68,750 is being considered as a replaceme
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