Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. prisma industries ltd. is considering replacing on

Prisma Industries Ltd. is considering replacing one of its machines with a newer and more...

80.2K

Verified Solution

Question

Accounting

Prisma Industries Ltd. is considering replacing one of its machines with a newer and more efficient model. The existing machine was purchased twelve years ago, has 15 years of useful life remaining and currently has a book value of $195,000. If replaced, the machine could be sold as scrap for $5,000. Maintenance and operating costs on the machine are $95,000 annually.
The new machine, which would have a useful life of fifteen years, has a purchase price of $365,000 and annual maintenace and operating costs of $88,000 annually. The employees would have to be trained on the new machine at an estimated cost of $75,000. Prisma estimates that due to the increased efficiency, other variable manufacturing costs would be reduced by $15,000 per year. If the new machine is purchased, one employee would have to be laid off, which would save the company an additional $82,000 annually. Given this information, what is the net incremental benefit (cost) of replacing the machine?
Select answer from the options below
The question cannot be answered without knowing the remaining useful life of the existing machine
($331,000)
($23,000)
$167,000

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

B What is this process A AUGUUA UUA C D A A U F LL...

Biology
Q

Presented below are selected ledger accounts of Windsor Corporation as of December 31, 2017. Cash $55,200 Administrative expenses 102,800 Selling expenses 83,460 Net...

Accounting
Q

Select the correct statement about isotopes.Isotopes of the same element have the same atomic number...

Biology
Q

E Initially interference is observed by YDSE with entire experimental set up inside a chamber...

Physics
Q

molecule consists of two atoms each of mass m and separated by a distance d...

Physics
Q

Solve the system of the simultaneous differential equationsdx/dt + y = e^t, x(0) = 1x...

Calculus
Q

Find fxy x y if f x y x y5 7 fyy x y

Calculus
Q

15 Convert to standard form y 7x 17 x 16 Solve the inequality set Graph...

Algebra
Q

explain how income is affected by the quality of management Explain...

Accounting
Q

A computerized accounting system will be able to generate financial statements that are not yet...

Accounting
Q

May Transactions May 1 2 3 4 5 8 8 8 9 10 10 11...

Accounting
Q

USF Health's average age of plant ratio is 6.5 years The peer group ratio is...

Finance