1-Rory Company has a machine with a book value of $79,000 and a remaining five-year useful life. A new machine is available at a cost of $116,000, and Rory can also receive $72,000 for trading in its old machine. The new machine will reduce variable manufacturing costs by $22,500 per year over its five-year useful life. Calculate the incremental income. (Any losses or outflows should be entered with a minus sign.)

2-

Gelb Company currently manufactures 53,000 units per year of a key component for its manufacturing process. Variable costs are $2.95 per unit, fixed costs related to making this component are $73,000 per year, and allocated fixed costs are $71,500 per year. The allocated fixed costs are unavoidable whether the company makes or buys this component. The company is considering buying this component from a supplier for $3.90 per unit. Calculate the total incremental cost of making 53,000 units and buying 53,000 units. Should it continue to manufacture the component, or should it buy this component from the outside supplier?