Question
Ridley Company has a factory machine with a book value of $95,600 and a remaining useful life of 5 years. A new machine is available
Ridley Company has a factory machine with a book value of $95,600 and a remaining useful life of 5 years. A new machine is available at a cost of $205,700. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $640,400 to $356,900. Prepare an analysis showing whether the old machine should be retained or replaced. (If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.)
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