Bryant Company has a factory machine with a book value of $94,300 and a remaining useful life of 5 years. It can be sold for $28,500. A new machine is available at a cost of $427,000. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $551,200 to $504,800. Prepare an analysis showing whether the old machine should be retained or replaced.

Brief Exercise 7-7 Bryant Company has a factory machine with a book value of $94,300 and a remaining useful life of 5 years. It can be sold for $28,500. A nevw machine is available at a cost of $427,000. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $551,200 to $504,800. Prepare an analysis showing whether the old machine should be retained or replaced (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