Jack received $560 from his grandmother. He decided to shop for a gift for himself and spent $7 for his bus fares. Jack decided to purchase a new bike for $560. For the same amount, he could have purchased a model GH-200 aeroplane that he adored and that would have provided $120 more benefit than the new bike. Jack was also considering a trip to Melbourne to visit his aunt, although he was not too keen about it. He was also interested in pursuing a course leading to a private pilot's licence, although he is a bit scared of heights. One month later, the price of the bike Jack purchased from Hut Ltd had gone down by $100. The bike had cost Hut Ltd $260 of labour and $170 of plant and equipment. The replacement cost for the bike is:
A) $100.
B) $430.
C) $460.
D) $560.

Question

Quizplus · Accepted Answer

Although Jack could have purchased the aeroplane for the same amount as the bike and received a $120 benefit, it is not clear what this benefit entails. Therefore, it is not a good choice as it does not provide a tangible benefit.

The trip to visit his aunt and the private pilot's license are both choices that require further consideration. While the trip to visit his aunt may not be something that he is too keen about, it could still provide valuable time with family and serve as a memorable experience. Pursuing a private pilot's license, on the other hand, may not be the best choice if he is scared of heights. It is important to consider if it is worth investing time and resources into something that may not align with personal preferences and could lead to anxiety or fear.

One month later, the price of the bike went down by $100. To determine the replacement cost, we need to add the cost of labour and plant and equipment to the new price of the bike.

New price of the bike = $560 - $100 = $460
Replacement cost of the bike = $460 + $260 + $170 = $890

Therefore, the replacement cost for the bike is $890.

Jack Received $560 from His Grandmother