Johnson Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing. Current Machine New Machine Original purchase cost $14,600 $25,300 Accumulated depreciation $6,300 Estimated annual operating costs $24,700 $20,000 Remaining useful life 5 years 5 years If sold now, the current machine would have a salvage value of $12,000. If operated for the remainder of its useful life, the current machine would have zero salvage value. The new machine is expected to have zero salvage value after 5 years. Prepare an incremental analysis to determine whether the current machine should be 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).) Sandhill Company reports the following operating results for the month of August: sales $400,000 (units 5,000), variable costs $247,000, and fixed costs $98,000. Management is considering the following independent courses of action to increase net income. 1. Increase selling price by 10% with no change in total variable costs or units sold. 2. Reduce variable costs to 59% of sales. Compute the net income to be earned under each alternative. 1. Net Income $ 2. Net Income $ Which course of action will produce the higher net income