Exercice 1 - BJB Company Sarah (the production manager at BJB Company) purchased a machine for the company last year. After the purchase, Sarah learned about a new machine that is more reliable than the machine that she purchased. The following information is available for the two machines: Annual operating costs for the old machine are $170,000. The new machine will decrease annual operating costs by $85,000. These amounts do not include any charges for depreciation. The company uses the straight-line depreciation method. These estimates of operating costs exclude reworking costs. The new machine will also result in a reduction in the defect rate from the current 4% to 1%. All defective units are reworked at a cost of $2 per unit. The company, on average, produces 130,000 units annually