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Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $48.000 and a remaining useful life
Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $48.000 and a remaining useful life of four years. It can be sold now for $58,000. Variable manufacturing costs are $42,000 per year for this old machine. Information on two alterative replacement machines follows. The expected useful life of each replacement machine is five years. Machine A Machine B Purchase price $ 122, eee $ 134,00 Variable manufacturing costs per year 28,888 13,880 (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 not complete. Complete this question by entering your answers in the tabs below. Req A Rey B Reg C and D Compute the income increase or decrease from replacing the old machine with Machine A. (Amounts to be deducted should be indicated with a minus sign.) Machine A: Keep or Replace Income Increase Analysis Keep Replace (Decrease) from Replacing Revenues Sale of existing machine S 0$ 58,000 Costs Purchase of new machine 122,000 x Variable manufacturing costs 20,000 Income (loss) S 0 $ 200,000 $ 200,000 Req A Rey B Reg C and D Compute the income increase or decrease from replacing the old machine with Machine B. (Amounts to be deducted should be indicated with a minus sign.) a 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) IS 0 $ 0 0 Answer is not complete. Complete this question by entering your answers in the tabs below. Req A ReqB Reg C and D 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? (d) Which new machine should Lopez purchase?
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