Question 21 of 32 Management of Lubowitz Co is considering whether to purchase...
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Management of Lubowitz Co is considering whether to purchase a new model machine costing $ or a new model machine costing $ to replace a
machine that was purchased years ago for $ The old machine was used to make toilet flanges until it broke down last week. Unfortunately, the old machine
cannot be repaired.
Management has decided to buy the new model machine. It has less capacity than the new model machine, but its capacity is sufficient to continue making toilet
flanges.
Management also considered, but rejected, the alternative of simply stopping making toilet flanges. If that were done, instead of investing $ in the new machine, the
money could be invested in a project that would return a total of $
In making the decision to buy the model machine rather than the model machine, the sunk cost was:
$
$
$
None of the above
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