Win Inc. is considering disposing of a machine with a book value of $24,870.00 a

Question

Win Inc. is considering disposing of a machine with a book value of $24,870.00 and an estimated remaining life of three years. The old machine can be sold for $5,563.00. A new machine with a purchase price of $73,846.00 is being considered as a replacement. It will have a useful life of three years and no residual value. It is estimated that annual variable manufacturing costs will be reduced from $41,842.00 to $20,513.00 if the new machine is purchased. Determine the net differential increase or decrease in cost for the entire three years for the new equipment. Select the correct answer. A) 5563 B)47770 C) -4296 D) 21329

Explanation / Answer

Differential cost = 41842 -20513 = 21329

correct option is "D"

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