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Exercise 23-10 Keep or replace LO P5 Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $36,000
Exercise 23-10 Keep or replace LO P5 Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $36,000 and a remaining useful life of five years, at which time its salvage value will be zero. It has a current market value of $46,000. Variable manufacturing costs de $33,300 per year for this machine. Information on two alternative replacement machines follows. Alternative Cost Variable manufacturing costs per year $121,000 21,000 Alternative 5116,000 10,00 Calculate the total change in net income if Alternative A, B is adopted Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xinhong purchase? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Alternative A Alternative Xinhong Purchase Calculate the total change in net income if Alternative B is adopted: (Cash outflows should be indicated by a minus sion) ALTERNATIVE INCREASE OR (DECREASE) IN NET INCOME (Cost to buy new machine (118.000 Calculate the total change in net income ir Alternative A, B is adopted. Should Xinhong keep or replace its manufacturing machine? the machine should be replaced, which alternative new machine should Xinhong purchase? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Alternative A Alternative B Xinhong Purchase Calculate the total change in net income If Alternative B is adopted (Cash outflows should be indicated by a minus sign) ALTERNATIVE B: INCREASE OR (DECREASE) IN NET INCOME Cost to buy new machine (110,000) Cash received to trade in old machine 40,000 Reduction in variable manufacturing costs 90,400 Total change in net incomo Is 20.400
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