Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $45,000 and a remaining useful life of five years. It can be sold now for $52,000. Variable manufacturing costs are $36,000 per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is five years, Machine A Purchase price Machine B Variable manufacturing costs per year $ 115,000 $ 125,000 19,000 15,000 (a) Compute the income increase or decrease from replacing the old machine with Machine A (b) Compute the income increase or decrease from replacing the old machine with Machine B. (c) Should Lopez keep or replace its old machine? (d) If the machine should be replaced, which new machine should Lopez purchase? (d) If the machine should be replaced, which new machine should Lopez purchase? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A Req B Reg C and D Compute the income increase or decrease from replacing the old machine with Machine A. (Amounts to be deducted indicated with a minus sign.) Keep Replace Income Increase (Decrease) from Replacing Machine A: Keep or Replace Analysis Revenues Sale of existing machine Costs Purchase of new machine Variable manufacturing costs Income (loss) s 0 $ (52,000) S 0 $ 180,000 $ (180,000) 115,000 95,000 $ (262,000) (82,000) CROQ ReqB X Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req A Req B Req C and D Compute the income increase or decrease from replacing the old machine with Machine B. (Amounts to be indicated with a minus sign.) Keep Replace Income Increase (Decrease) from Replacing Machine B: Keep or Replace Analysis Revenues Sale of existing machine Costs Purchase of new machine Variable manufacturing costs Income (loss) 0 $ (52,000) 0 $ 180,000 $ (180,000) 125,000 % 75,000 $ (252,000) $ (72,000) years. Machine A Machine B Purchase price $ 115,000 $ 125,000 Variable manufacturing costs per year 19,000 15,000 (a) Compute the income increase or decrease from replacing the old machine with Machine A. (b) Compute the income increase or decrease from replacing the old machine with Machine B. (c) Should Lopez keep or replace its old machine? (d) If the machine should be replaced, which new machine should Lopez purchase? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. ReqA ReqB Reg C and D (c) Should Lopez keep or replace its old machine? (d) If the machine should be replaced, which new machine should Lopez purchase? (c) Should Lopez keep or replace its old machine? Replace (d) Which new machine should Lopez purchase? Machine B
