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On January 2, 2019, Riverside Hospital purchased a $106,000 special radiology scanner from Faital Inc. The scanner has a useful life of five years and will have no disposal value at the end of its useful life. The straight-line method of depreciation is used on this scanner. Annual operating costs with this scanner are $105,300. Approximately one year later, the hospital is approached by Alliant Technology salesperson Jinsil Soon, who indicates that purchasing the scanner in 2019 from Faital was a mistake. She points out that Alliant has a scanner that will save Riverside Hospital $26,300 a year in operating expenses over its four-year useful life. She notes that the new scanner will cost $120,500 and has the same capabilities as the scanner purchased last year. The hospital agrees that both scanners are of equal quality. The new scanner will have no disposal value. Alliant agrees to buy the old scanner from Riverside Hospital for $59,100. (a) Your answer is correct. Assume Riverside Hospital sells its old scanner on January 2, 2020. Calculate the gain or loss on the sale. If Riverside Hospital sells its old scanner it incurs a loss V of $ 25700 i (b) Using incremental analysis, determine whether Riverside Hospital should purchase the new scanner on January 2, 2020. (If an amount reduces the net income then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000).) Net Income Increase (Decrease) Retain Scanner Replace Scanner Operating cost New scanner cost Old scanner salvage Total Riverside Hospital $ $ LA $ $ purchase the new scanner. $ $ Montel Firm is considering whether to outsource the manufacture of subcomponent JXY. The accounting department provides the following cost information for manufacturing 11,200 units of subcomponent JXY per month. Direct materials costs $38,000 Direct labour costs 29,500 Variable overhead 15,500 Fixed overhead* 13,500 *Fixed overhead includes $5,100 supervisor's salary. International Firm agrees to supply Montel with 11,200 units per month for a total cost of $148,100. If subcomponent JXY is outsourced, Montel will be able to increase the production and sales of its final product by 1,080 units per month; the product is sold for $115 per unit and its average variable costs per unit are $65. The supervisor's salary will be eliminated if subcomponent JXY is outsourced. Prepare an incremental analysis for subcomponent JXY. (If an amount reduces the incremental costs then enter with a negative sign preceding the number e.g.-15,000 or parenthesis, e.g. (15,000).) Incremental Costs Make Buy (Savings) Direct materials Direct labour Purchase price Total monthly cost Opportunity cost Variable overhead Cost of good sold Manufacturing overhead Cost of good sold Manufacturing overhead Fixed overhead LA 11