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10. OG Toy Company is unsure whether to sell its product assembled or unassembled. The variable cost of the unassembled product is $24, and OG would sell it for $52. The variable cost to assemble the product is estimated at $17 per unit, and the company believes the market would support a price of $68 for the assembled product. What decision should OG Toy make and why? Process further, net income will increase $4 per unit. Process further, net income will increase $21 per unit. Do not process further, net income will go down $i per unit. Do not process further, net income will go down $11 per unit. a. 11. Chippendale Company has a machine that puts labels on bottles. The machine can be sold for S15,000 cash if it is replaced. It has a remaining useful life of 3 years, and no salvage value. A new, more efficient machine is available at a cost of $300.000 that will have a 3-year useful life with no salvage value. The new machine will lower annual variable production costs from $520,000 to $440,000 per year. The total 3-year cost savings (or additional cost) from replacing the old machine is $240,000 a. b. $255,000 e (545,000) d. (S60,000) 12. Petroni Co. has 2,000 tons of old inventory in storage that cost $24,000. It can be sold as scrap for $35,000. The 2,000 tons of old inventory could be sold for $58.000 if it is processed further at a total additional cost of $24,000, What should Petroni do? Process it further and sell it for $58.000 b. Dispose of the inventory for nothing to avoid any further decline in value c. Hold the inventory at its $24,000 cost and sell it next year for $30,000 d. Sell the inventory for its $35,000 scrap value 13. Lynette Co. is deciding whether to replace an old machine. A new machine costs $140,000. The following additional information is available: Old Machine 4 years New Machine 4 years $200,000 Useful life Annual operating costs $240,000 Residual value zero zero If the old machine is replaced, it can be sold for $24,000 cash. The 4-year cost savings (or additional cost) from replacing the old machine is a. $44,000 b. $20,000 c. S184,000 d. S(76,000) 14. The expected average rate of return for a proposed investment of $600,000 in equipment (asset), with a useful life of five years, no residual value, and an expected total net income of $240,000 for 5 years is: a. 40% b. 20% c. 24% d. 16% 3/2

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