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please help will upvote if correct Johnson Enterprises uses a computer to handle its sales invoices. Lately, business has been so good that it takes
please help will upvote if correct
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 $15,000 $25,000 Accumulated depreciation $6,000 SO Estimated annual operating costs $25,000 $20,000 Remaining useful life 5 years 5 years If sold now, the current machine would have a salvage value of $6,000. 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. Instructions Prepare an incremental analysis to determine whether the current machine should be replaced. Use incremental analysis concerning elimination of division. Solution Net Income Retain Replace Increase Machine Machine (Decrease) Operating costs New machine cost Salvage value (old) Total Step by Step Solution
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