Business, 15.04.2020 01:23 george8396

Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $45,000 and a remaining useful life of 5 years, at which time its salvage value will be zero. It has a current market value of $52,000. Variable manufacturing costs are $36,000 per year for this machine. Information on two alternative replacement machines follows.
Alternative A Alternative B
Cost $115,000 $ 125,000
Variable manufacturing costs per year 19,000 15,000
Required:
1. Calculate the total change in net income if Alternative A, B is adopted.
2. Should Xinhong keep or replace its manufacturing machine?
3. If the machine should be replaced, which alternative new machine should Xinhong purchase?

Answers: 1

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Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book v...

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