Brief Exercise 20-7 Bryant Company has a factory machine with a book value of $93,700 and a remaining useful life of 7 years. It can be sold for $27,100. A new machine is available at a cost of $394,100. This machine will have a 7-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $634,100 to $522,000. Prepare an analysis showing whether the old machine should be retained or replaced.(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 Equipment	Replace Equipment	Net Income Increase (Decrease)
Variable manufacturing costs	$	$	$
New machine cost
Sell old machine
Total	$	$	$

The old factory machine should be

replacedretained

.

At Bargain Electronics, it costs $34 per unit ($17 variable and $17 fixed) to make an MP3 player at full capacity that normally sells for $54. A foreign wholesaler offers to buy 4,950 units at $29 each. Bargain Electronics will incur special shipping costs of $2 per unit. Assuming that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order.(Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Reject Order	Accept Order	Net Income Increase (Decrease)
Revenues	$	$	$
Costs-Manufacturing
Shipping
Net income	$	$	$

The special order should be rejectedaccepted.

Brief Exercise 20-4 Manson Industries incurs unit costs of $6 ($4 variable and $2 fixed) in making an assembly part for its finished product. A supplier offers to make 10,000 of the assembly part at $5 per unit. If the offer is accepted, Manson will save all variable costs but no fixed costs. Prepare an analysis showing the total cost saving, if any, Manson will realize by buying the part.(Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Make	Buy	Net Income Increase (Decrease)
Variable manufacturing costs	$	$	$
Fixed manufacturing costs
Purchase price
Total annual cost	$	$	$

The decision should be to

buymake

the part.