nadine with abook value d$248.800 has an estimand six year we. Apropols offered

Question

nadine with abook value d$248.800 has an estimand six year we. Apropols offered to sd the old machine for S21S100.nd replatwhias" madne·acot of S282 S00. new machine would reduce annual direct labor costs from $50,300 to $40,200 mwmahi" has -"We hno whether to continue with the old machine (Ahernative1) or neplace the old machine (Aternative 2).an mount is Revenues: Proceeds from sale of old machine Purchase price Diret labor (6 years) Income (Loss b. Should the company continue with the old machine (Alternative 1) or replace the old machine Ahetiv2

Explanation / Answer

Differential Analysis: Continue Replace Net Increase/ with Old With New Decrease in Net income Revenue Proceeds from sale of old machine 215100 215100 Cost: Purchase price -282800 -282800 Direct labour cost(5 year) -301800 -241200 60600 Income/ (loss) -301800 -308900 -7100 The company should: CONTINUE WITH OLD MACHINE

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