The Enhanced Products Division of Forrest Industries makes ceramic pots that are used to hold large decorative plants. During 2013, the division produced 10,000 pots and incurred the following costs:

The Enhanced Products Division of Forrest Industries makes ceramic pots that are used to hold large decorative plants. During 2013, the division produced 10,000 pots and incurred the following costs: unit-level material costs (10,000@ $15)      $15,000 unit-level labor costs  (10,000@ $20)          $200,000 Unit-level overhead costs  (10,000 @16)     $160,000 Depreciation expenses on equipment*         $30,000 Other manufacturing overhead **                    $36,000 *The equipment was purchased for $150,000 and has a current book value of $120,000, remaining useful life of four years, and a zero salvage value. If the company does not use the equipment, it can be leased for $8,000 per year. **Includes supervisors’ salaries and rent for manufacturing plant. The division is considering replacing the equipment used to manufacture its ceramic pots. Replacement equipment can be purchased at a price of $200,000. The new equipment, which is expected to last 4 years and have a salvage value of $20,000, will reduce unit-level labor costs by 25 percent. The division desires to maintain its production and sales at 10,000 ceramic pots per year: Required: a) is the amount of the total relevant cost of operating the existing equipment?

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