(b) Prepare an incremental analysis of Twilight Hospital. (In the first two colu

Question

(b) Prepare an incremental analysis of Twilight Hospital. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Retain Scanner Replace Scanner Net Income Increase (Decrease) Annual operating costs s New scanner cost Old scanner salvage Total Should Twilight Hospital purchase the new scanner on January 2, 2017? Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Solution:-

Yes. Twilight Hospital should replace the old scanner because it will result in a savings of $6,000 over the next three years.

Working note:-

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Retain Scanner Replace Scanner Net Income Increase (Decrease) Amount Calculation Amount Calculation Amount Calculation Annual perating Costs $ 312,000 104,000*3 $ 240,000 3*(104,000-24,000) $ 72,000 312,000-240,000 New Scanner Cost 0 109,000 cost of new scaner (109,000) 0-109,000 Old Scanner Salvage 0 (43,000) Price of old scaner 43,000 0-(-43,000) Total $ 312,000 $ 306,000 $6,000

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