Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book...
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Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $44,000 and a remaining useful life of 4 years, at which time tssalvage value will be zero. It has a current market value of $54,000. Variable manufacturing costs are $33,100 per year for this machine Information on two alternative replacement machines follows. Cost Variable manufacturing costs per year Alternative A $118,000 22,300 Alternative B $117,000 10,200 Calculate the total change in net income if Altenative A is adopted. (Cash outflows should be indicated by a minus sign.) ALTERNATIVE A: INCREASE OR (DECREASE) IN NE INCOME Cost to buy new machine Cash received to trade in old machine Reduction in variable manufacturing costs Total change in net income Calculate the total change in net income if Alternative B is adopted. (Cash outflows should be indicated by a minus sign.) ALTERNATIVE B: INCREASE OR (DECREASE) IN NET Cost to buy new machine Cash received to trade in old machine Reduction in variable manufacturing costs Total change in net income INCOME
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