Bridgeport Pix currently uses a six$-$year$-$old molding machine to manufacture silver picture frames. The company paid $$95,000$ for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $$10,000$ overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells $9,000$ frames per year, generating a total contribution margin of $$93,000.$

Martson Molders currently sells a molding machine that will allow Bridgeport Pix to increase production and sales to $12,000$ frames per year. The machine, which has a ten$-$year life, sells for $$133,000$ and would cost $$14,000$ per year to operate. Bridgeport Pix's current machine costs only $$8,000$ per year to operate. If Bridgeport Pix purchases the new machine, the old machine could be sold at its book value of $$5,000.$ The new machine is expected to have a salvage value of $$19,700$ at the end of its ten$-$year life. Bridgeport Pix uses straight$-$line depreciation.

Click here to view the factor table.Bridgeport Pix currently uses a six$-$year$-$old molding machine to manufacture silver picture frames. The company paid $$95,000$ for the machine, which was state of the art at the time of purchase. Although the machine will likely last another ten years, it will need a $$10,000$ overhaul in four years. More important, it does not provide enough capacity to meet customer demand. The company currently produces and sells $9,000$ frames per year, generating a total contribution margin of $$93,000.$

Martson Molders currently sells a molding machine that will allow Bridgeport Pix to increase production and sales to $12,000$ frames per year. The machine, which has a ten$-$year life, sells for $$133,000$ and would cost $$14,000$ per year to operate. Bridgeport Pix's current machine costs only $$8,000$ per year to operate. If Bridgeport Pix purchases the new machine, the old machine could be sold at its book value of $$5,000.$ The new machine is expected to have a salvage value of $$19,700$ at the end of its ten$-$year life. Bridgeport Pix uses straight$-$line depreciation.

Click here to view the factor table.