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Cengage CengageNOW| Online teachin × Chegg Study l Guided Solution × + ESearch Test: Ch 25-5 Test Time Remaining: 1:14:20 Email Instructor Questions D Muliple Choice 25-029 Algorithmic 8 O 9. 10. Save Submit Test for Grading Question 10 or 19 Win Inc. is considering disposing of a machine with a book value of $20,18o.oo and an estimated remaining life of three years. The old machine can be sold for $5.575.00. A new machine with a purchase price of $68,075.oo 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 11. be reduced from $40:38o.oo to $20,355.oo if the new machine is purchased. Determine the net differential increase or decrease in cost for the entire three years for the new equipment. 12.? 13, o o $20,025.00 14 O $5,575.00 15. 16. O Select the correct answer O $-2,425.00 O $42,145.00 18. O 19. b Multiple Choice 25-029 Algorithmic Question 10 of 19 Email Instructor Save Submit Test for Grading 1:15 PM O Type here to search ^# 4) 17/2018

Explanation / Answer

The Answer is - $2,425

Calculations

Savings in Variable manufacturing cost for 3 years     

If the New Machine is purchased ($40,380 - $20,355 ) x 3 $60,075

Add : Sale Value of Old Machine $5,575

Total Savings $65,650

Less : Purchase Price of New Machine ($68,075)

Net Differential Decrease in cost for the entire 3 Years ($2,425)

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