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		$15,200			$24,800
Accumulated depreciation		$6,700			_
Estimated annual operating costs		$24,700			$19,600
Remaining useful life		5 years			5 years

If sold now, the current machine would have a salvage value of $10,100. 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).)

		Retain Machine		Replace Machine		Net Income Increase (Decrease)
Operating costs		$enter operating costs in dollars		$enter operating costs in dollars		$enter operating costs in dollars
New machine cost		enter the new machine cost in dollars		enter the new machine cost in dollars		enter the new machine cost in dollars
Salvage value (old)		enter the salvage value of the old machine		enter the salvage value of the old machine		enter the salvage value of the old machine
Total		$enter a total of the three previous amounts		$enter a total of the three previous amounts		$enter a total of the three previous amounts

Moonbeam Company manufactures toasters. For the first 8 months of 2020, the company reported the following operating results while operating at 75% of plant capacity:

Sales (341,600 units)		$4,370,000
Cost of goods sold		2,591,280
Gross profit		1,778,720
Operating expenses		836,920
Net income		$941,800

Cost of goods sold was 70% variable and 30% fixed; operating expenses were 80% variable and 20% fixed. In September, Moonbeam receives a special order for 15,000 toasters at $7.50 each from Luna Company of Ciudad Juarez. Acceptance of the order would result in an additional $2,900 of shipping costs but no increase in fixed costs. (a) Prepare an incremental analysis for the special order. (Round computations for per unit cost to 2 decimal places, e.g. 15.25 and all other computations and final answers to the nearest whole dollar, e.g. 5,725. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

		Reject Order		Accept Order		Net Income Increase (Decrease)
Revenues		$enter revenues in dollars		$enter revenues in dollars		$enter revenues in dollars
Cost of goods sold		enter the cost of goods sold in dollars		enter the cost of goods sold in dollars		enter the cost of goods sold in dollars
Operating expenses		enter operating expenses in dollars		enter operating expenses in dollars		enter operating expenses in dollars
Net income		$enter net income in dollars		$enter net income in dollars		$enter net income in dollars

(b) Should Moonbeam accept the special order?

Moonbeam Company select an option

should rejectshould accept

the special order.