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 MachineNew MachineOriginal purchase cost$15,400$24,900Accumulated depreciation$6,700_Estimated annual operating costs$24,500$19,900Remaining useful life5 years5 years

If sold now, the current machine would have a salvage value of $11,900. 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

MachineReplace

MachineNet Income

Increase

(Decrease)Operating costs$

enter operating costs in dollars

$

enter operating costs in dollars

$

enter operating costs in dollars

New machine costenter 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

The current machine should be

select an option

replacedretained .