Lance Weber manages the cutting department of Schulze Timber Company He purchased a tree-cutting machine on January 1, 2014, for $480,000. The machine had an estimated useful life of 5 years and zero salvage value, and the cost to operate it is $91,000 per year Technological developments resulted in the development of a more advanced machine available for purchase on January 1, 2015, that would allow a 20 percent reduction in operating costs. The new machine would cost $240,000 and have a 4-year useful life and zero salvage value. The current market value of the old machine on January 1, 2015, is $220,000, and its book value is $384,000 on that date. Straight-line depreciation is used for both machines. The company expects to generate $243,000 of revenue per year from the use of either machine. Required: a-1. Calculate the total avoidable costs in keeping the old machine and replace with new machine. Keep Old Replace With New Decision Total avoidable costs a 2. Should the old machine be replaced on January 1, 2015? Yes No b. Prepare s for four years (2015 through 2018) assuming that the old machine is income statements retained Total Revenue Depreciation expense