Questions -
Q1. Breezy Company is disposing of equipment that was originally purchased for $600,000 and has $240,000 of accumulated depreciation to date. The same equipment would cost $800,000 to replace. What is the total amount of sunk cost?
$800,000
$360,000
$240,000
$840,000
Q2. The Clear Music Company produces and sells a desktop speaker for $240. The company has the capacity to produce 64,000 speakers each period. At capacity, the costs assigned to each unit are as follows:
Unit level costs - $115
Product level costs - $29
Facility level costs - $19
The company has received a special order for 15,000 speakers. If this order is accepted, the company will have to spend $24,000 on additional costs. Assuming that no sales to regular customers will be lost if the order is accepted, at what selling price will the company be indifferent between accepting and rejecting the special order? (Do not round your intermediate calculations. Round your final answer to two decimal places.)
$124.10
$116.60
$127.10
$166.60