Elmdale Company has a machine that affixes labels to bottles. The machine has a book value of $80,000 and a remaining useful life of 3 years and no salvage value. A new, more efficient machine is available at a cost of $300,000 that will have a 5-year useful life with no salvage value. The new machine will lower annual variable production costs from $520,000 to $410,000. 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 Change
Variable manufacturing costsNet savings over 3 yearsNew machine costFixed manufacturing costs		$		$		$
New machine costNet savings over 3 yearsVariable manufacturing costsFixed manufacturing costs
Net savings over 3 yearsFixed manufacturing costsNew machine costVariable manufacturing costs						$