{C} Warning Don\'t show me this message again for the assignment Ok Cancel (a) W
ID: 2420825 • Letter: #
Question
{C}
Warning
Don't show me this message again for the assignment
Ok
Cancel
(a)
Warning
Don't show me this message again for the assignment
Ok
Cancel
Open Show Work
Show Solution
Show Answer
Link to Text
(b)
Last year (2013), Richter Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the company’s accountant to provide him with cost data on the company’s elevator. This information is presented below.Old Elevator New Elevator Purchase price $104,100 $160,308 Estimated salvage value 0 0 Estimated useful life 5 years 4 years Depreciation method Straight-line Straight-line Annual operating costs other than depreciation: Variable $ 35,457 $ 9,247 Fixed 23,815 8,455
Annual revenues are $239,259, and selling and administrative expenses are $29,638, regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2014, Richter Condos will be able to sell it for $24,413.
{C}
Warning
Don't show me this message again for the assignment
Ok
Cancel
Explanation / Answer
Old Elevator New elevator Purcahse price $104,100 160308 Useful life 5 4 Annual Depreciation $20,820 $40,077 Book value of old elevatorr in 2014 83280 Variable 35457 9247 LessL selling Price 24413 Fixed $23,185 8455 Loss on sale of elevator 58867 Cost saved on Variable and fixed $58,642 $17,702 $40,940 Annual revenue $239,259 Cash Outflow for new elevator160308-24413 135895 Selling & Administrative Expenses 29638 Cash Ouflow ($135,895) saving in cost exceptdepreciation new elevator is purchased for 4 years 40940*4 $163,760 Cost saving $27,865 it should not be replaced b) 1) The old elevator is retained Ince Statement-4 year summarized Sales $957,036 Less: Variable Cost 141828 Less:Fixed Cost $92,740 Selling & Administrative Expenses 118552 Less: Depreciation $83,280 Net Income $520,636 #REF! #REF! 2) The New elevator is purchased Ince Statement-4 year summarized Sales $957,036 Less: Variable Cost 36988 Less:Fixed Cost $33,820 Selling & Administrative Expenses 118552 Less: Depreciation $160,308 Less: Loss on Old Elevator $0 Net Income $607,368
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.