Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $38,000 and a…

Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $38,000 and a remaining useful life of 5 years, at which time its salvage value will be zero. It has a current market value of $48,000. Variable manufacturing costs are $33,000 per year for this machine. Information on two alternative replacement machines follows.

  

 

Alternative A

Alternative B

  Cost

$

117,000

 

$

117,000

 

  Variable manufacturing costs per year

 

22,100

 

 

10,500

 


    

 

Calculate the total change in net income if Alternative A is adopted. (Cash outflows should be indicated by a minus sign.)

 

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