Your Corporation bought a stamping machine to make the cans. The cost of the machine was $60,000. The machine has a useful life of 5 years and a salvage value of zero at the end of those five years. The variable manufacturing cost of producing the cans is $0.05 per can. The only fixed manufacturing cost is the annual depreciation of $12,000 on the stamping machine. Your Corporation needs 200,000 cans annually. Another Company recently offered to supply all of the can needs for the next four years at $0.07 per can. If Your Company buys the cans, it can sell the stamping machine right now for $35,000. If Your Company buys the cans, what will be the total dollar increase or decrease in income for the total four years? Enter an incrase as a positve number. Enter a decrease with a minus sign in front.
Your Corporation bought a stamping machine to make the cans. The cost of the machine was $60,000. The machine has a useful life of 5 years and a salvage value of zero at the end of those five years. The variable
Enter an incrase as a positve number. Enter a decrease with a minus sign in front.
Relevant costs helps in decision making that is whether to make or buy the product. These costs helps us to derive at result that is if buying is beneficial or not.
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