Home / Questions / White Water Tours is considering the purchase of a new tour boat. They are faced with cho
White Water Tours is considering the purchase of a new tour boat. They are faced with choosing between the Wave Runner and the Split Hull models. The boats are comparable on performance and both meet the company's needs equally. Both boats have an expected useful life of five years at which time they will be sold. The following information has been gathered to assist in making the purchase decision:
|
|
WAVE RUNNER |
SPLIT HULL |
|
Purchase price |
$110,350 |
$121,900 |
|
Fuel cost over useful life |
29,680 |
28,430 |
|
Insurance cost over useful life |
60,000 |
60,000 |
|
Estimated repairs and maintenance |
15,490 |
17,380 |
|
Revenue generated over useful life |
575,000 |
575,000 |
|
Estimate selling price at end of useful life |
22,750 |
18,500 |
Required:
A. Which if any of the listed costs above are not relevant to your decision?
B. What are the total relevant costs of purchasing the Wave Runner?
C. What are the total relevant costs of purchasing the Split Hulla?
D. What is the differential cost involved in your decision?
1) Fixed costs stay constant in total over a wide range of activity levels.
2) All costs contain both a fixed and a variable part.
3) The total cost of a product equals the total fixed costs plus the average variable costs.
4) A marginal cost is the cost of making one more unit of a product.
5) Average variable costs:
A) remain the same as production decreases.
B) remain the same as production increases.
C) go down as production decreases.
D) remain the same no matter if production increases or decreases.
Dec 07 2019 View more View Less
A rectangular loop of wire containing a high-resistance voltmeter has corners initially at (a/2, b/2, 0), (−a/2, b/2, 0), (−a/2, −b/2, 0), and (a/2, −b/2, 0). The loop be...
Jun 14 2020In the 1970s and 1980s Palmisano states that IBM was organized as a classic multinational enterprise. What does this mean? Why do you think IBM was organized that way? Wh...
Jul 27 2020The money supply is backed:A. by the government's ability to control the supply of money and therefore to keep its value relatively stable.B. by government bonds.C. dolla...
Jun 05 2021How are scarcity and trade-offs connected with each other?
Jun 08 2021Use the table below, summarized from CFO MagazineAc€?cs 2006 working capital survey to answer this question. Compare GenzymeAc€?cs CCC to that of Quest Diagnostics. What ...
May 02 2020Another story... In this discussion board, demonstrate your understanding of utility maximization with a story that incorporates the concepts of the chapter.
Aug 21 2021Use a graph of the sequence to decide whether the sequence is convergent or divergent. If the sequence is convergent, guess the value of the limit from the graph and then...
Jun 24 2021Write complete sentences that use the words shown. Use first-person pronouns (I, we, you, he, she, it, they) and third-person pronouns (me, us, you, her, him, it, them) t...
Jun 16 2021The M1 money supply is composed of:a. All coins and paper money held by the general public and the banks.b. Checkable deposits and currency in circulation.c. Bank deposit...
Apr 28 2021Construct an External Factor Evaluation Matrix On Microsoft. This Matrix should follow the format of the examples in Chapter 3. From textbook: Strategic Management: Conce...
May 24 2018