Ch 10 Homework Exercise 10-12 Keep or replace LO A1 points useful life of 4 year

Question

Ch 10 Homework Exercise 10-12 Keep or replace LO A1 points useful life of 4 years, at which time its salvage value will be zero. It has a current market value of $48,000. Va variable "anfacturi costs per year 22,309 10, 300 Calculate the total change in net income if Alternative A, B is adopted the machine should be replaced, which alternative new machine should Xinhong purchase? Should Xinhong keep or replace its manufacturing machine? If Complete this question by entering your answers in the tabs below Purchase Calculate the total change in net income if Alernative A is adopted. (Cash outflows should be indicated by a minus sign) to buy nea machre old machine change in net (6,000) Reference inks Type here to search

Explanation / Answer

Alternative A:Increase or (Decrease) in net income cost to buy new machine -124,000 Cash received to trade in old machine 48,000 Reduction in variable manufacturing costs 43,600 total change in net income -32,400 Alternative B:Increase or (Decrease) in net income cost to buy new machine -119,000 Cash received to trade in old machine 48,000 Reduction in variable manufacturing costs 91,600 total change in net income 20,600 Alternative B should be selected

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