Three years ago, the Oak Street Frozen Treats bought a frozen yogurt machine for $8,800. A salesman has just suggested to the Frozen Treats manager that she replace the machine with a new, $10,000 machine. The manager has gathered the following data: (Click the icon to view the additional information.) Read the requirements. Requirement 1. Compute the difference in total costs over the next 5 years under both alternatives, that is, keeping the original machine or replacing it with the new machine. Ignore taxes. (Use a minus sign or parentheses for numbers to be subtracted. Complete all answer boxes in the "difference" column and leave other unused cells blank.) Five Years Together Replace Difference Cash operating costs Old machine (book value): Periodic write-off as depreciation or Lump-sum write-off Disposal value New machine: Acquisition cost Total costs 1 Keep T Data table Original cost Useful life in years Current age in years. Useful life remaining in years. Accumulated depreciation Book value Disposal value (in cash) now Disposal value in 5 years Annual cash operating cost Print Old Machine $ 8,800 8 3 5 $ 3,300 $ 5,500 $ 500 0 $ 5,300 Done New Machine $ 10,000 5 0 5 Not acquired yet Not acquired yet. Not acquired yet 0 $ 3,200
Three years ago, the Oak Street Frozen Treats bought a frozen yogurt machine for $8,800. A salesman has just suggested to the Frozen Treats manager that she replace the machine with a new, $10,000 machine. The manager has gathered the following data: (Click the icon to view the additional information.) Read the requirements. Requirement 1. Compute the difference in total costs over the next 5 years under both alternatives, that is, keeping the original machine or replacing it with the new machine. Ignore taxes. (Use a minus sign or parentheses for numbers to be subtracted. Complete all answer boxes in the "difference" column and leave other unused cells blank.) Five Years Together Replace Difference Cash operating costs Old machine (book value): Periodic write-off as depreciation or Lump-sum write-off Disposal value New machine: Acquisition cost Total costs 1 Keep T Data table Original cost Useful life in years Current age in years. Useful life remaining in years. Accumulated depreciation Book value Disposal value (in cash) now Disposal value in 5 years Annual cash operating cost Print Old Machine $ 8,800 8 3 5 $ 3,300 $ 5,500 $ 500 0 $ 5,300 Done New Machine $ 10,000 5 0 5 Not acquired yet Not acquired yet. Not acquired yet 0 $ 3,200
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Subject- accounting
Transcribed Image Text:Three years ago, the Oak Street Frozen Treats bought a frozen yogurt machine for $8,800. A salesman has just suggested to the Frozen Treats manager that she replace the machine with a new, $10,000 machine. The manager has gathered the following data:
(Click the icon to view the additional information.)
Read the requirements.
Requirement 1. Compute the difference in total costs over the next 5 years under both alternatives, that is, keeping the original machine or replacing it with the new machine. Ignore taxes. (Use a minus sign or parentheses for numbers to be subtracted. Complete all answer boxes in the "difference" column and leave other unused cells blank.)
Five Years Together
Keep
Replace Difference
Cash operating costs
Old machine (book value):
Periodic write-off as depreciation
or
Lump-sum write-off
Disposal value
New machine: Acquisition cost
Total costs
C
Data table
Original cost
Useful life in years
Current age in years
Useful life remaining in years
Accumulated depreciation
Book value
Disposal value (in cash) now
Disposal value in 5 years
Annual cash operating cost
Print
Old Machine
$ 8,800
8
3
5
$ 3,300
$
5,500
$
500
0
5,300
$
Done
New Machine
$10,000
5
0
5
Not acquired yet
Not acquired yet
Not acquired yet
0
$ 3,200
X
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