MC Qu, 22 A boat, costing $108,000 and uninsured, was … A boat, costing $108,000
ID: 2512049 • Letter: M
Question
MC Qu, 22 A boat, costing $108,000 and uninsured, was … A boat, costing $108,000 and uninsured, was wrecked the very and be brand new as far os operating and first day t was used In can ether be disposed for $11,000 cash and be repiaced wth r bost cotng $10000 characteristics and looks are concerned Arelevant cost analysis of the decision to replece the boot shows O A cost equivalence between the two decision options O An $11.000 net advantage associated With the decision to fix the old bo 0 A$1000 ? O A $21000 cost advantage associated with the decision to fx the old boet O A $2.000 cost advantege associated with the dežision to purchase a new bot ntage associated with the decision to fix the olg boat
Explanation / Answer
1. The boat will yield $11000 when it is disposed and a brand new boat can be purchased for $ 110000. Thus, the net cost for a new boat is $99000. The boat can be rebuilt for $98000.
Thus, there is a cost advantage of $1000.
Correct option is the third one.
2. Contribution margin= Total revenue- total variable costs
=$240-$67-$36-$60-$35=$42
The correct option is the fourth one.
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