Bryant Company has a factory machine with a book value of $85,700 and a remaining useful life of 7 years. It can be sold for $25,900. A new machine is available at a cost of $420,000. This machine will have a 7-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $594,400 to $522,800.

Retain Equipment Replace Equipment Net Income

Increase(Decrease)

Variable manufacturing costs $ $ $

New machine cost

Sell old machine

Total $ $ $

Should the old equipment be retained or replaced?

Show calculations to determine answer.