Relevant and sunk costs, Karen's Cookie Company is

Relevant and sunk costs

Assignment Help Managerial Accounting

Reference no: EM1348007

Karen's Cookie Company is considering replacing its giant cookie mixer with the new one. The following data has been compiled to measure the function:

EXISTING NEW
Original Cost $8,000 $10,000
Annual Operating Cost $4,000 $2,200
Remaining Life 5 years 5 years
Disposal value now $3,000

a. What costs are relevant?

b. What costs are sunk?

c. What are the net cash flows, assuming Karen's Cookie Company purchases the new cookie mixer?

Reference no: EM1348007

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