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Carol's Cupcakes relies heavily on an industrial mixer to produce its yummy treats. Recently the mixer has not functioned well and some cupcake batches were

Carol's Cupcakes relies heavily on an industrial mixer to produce its yummy treats. Recently the mixer has not functioned well and some cupcake batches were not being produced. A major overhaul costing $10,700 would make the current mixer work properly for the balance of its useful life. Management is considering updating the mixer with a newer improved model model.

Current Mixer

New Model

Original Purchase Cost

$30,300

$23,300

Accumulated Depreciation

16,900

---

Estimated Operating Costs

3,200

2,100

Useful Life

5 years

5 years

If sold now, the current mixer would have a salvage value of $4,300. If operated for the remainder of its useful life, the current mixer would have zero salvage value. The new mixer is expected to have zero salvage value after 5 years.Prepare an analysis to show whether the company should retain or replace the mixer by copying and completing the below chart in the answer area

an analysis to show whether the company should retain or replace the mixer by copying and completing the below chart in the answer area

Keep Mixer Replace Mixer
Net Income Increase/Decrease
Period of 5 Years

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