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Ivanhoe Company has a factory machine with a book value of $ 86,300 and a remaining useful life of 7 years. It can be sold

Ivanhoe Company has a factory machine with a book value of $ 86,300 and a remaining useful life of 7 years. It can be sold for $ 33,500. A new machine is available at a cost of $ 359,000. This machine will have a 7-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $ 623,300 to $ 461,800. Prepare an analysis showing whether the old machine should be retained or replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. 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 $ enter a dollar amount $ enter a dollar amount $ enter a dollar amount
New machine cost enter a dollar amount enter a dollar amount enter a dollar amount
Sell old machine enter a dollar amount enter a dollar amount enter a dollar amount
Total $ enter a total amount $ enter a total amount $ enter a total amount

The old factory machine should be select an option replacedretained.

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