ACTG2020_Week5 2014 Ch12CMD (1)

Relevant financial cost of driving gasoline 460 0050

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: $0.050 per km) Maintenance (460 @ $0.065 per km) Reduction in resale (460 @ $0.026 per km) Parking in Waterloo (2 days @ $25 per day) Total $ 23.00 29.90 11.96 50.00 $ 114.86 Relevant Financial Cost of Taking the Train Round-trip ticket $ 104.00 LO 1 Total and Differential Cost Approaches to analyze alternatives Worldwide Airways is thinking about replacing a three year old loader with a new, more efficient loader. New loader List price Annual operating expenses Expected life in years Old loader Original cost Remaining book value Disposal value now Annual variable expenses Remaining life in years $ 15,000 45,000 1 $ 100,000 25,000 5,000 80,000 1 Relevant Costs If we keep the old loader, we will have depreciation If we keep the old loader, we will have depreciation costs of $25,000. If we replace the old loader, costs of $25,000. If we replace the old loader, we will write-off the $25,000 when sold. There is we will write-off the $25,000 when sold. There is no difference in the cost, so it is not relevant...
View Full Document

Ask a homework question - tutors are online