Ridley Company has a factory machine with a book value of $84,000 and a remaining useful life of 6 years. A new machine is available at a cost of $200,400. This machine will have a 6-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $582,100 to $430,500.

Brief Exercise 23-6 Ridley Company has a factory machine with a book value of $84,000 and a remaining useful life of 6 years A new machine is available at a cost of $200,400. This machine will have a 6-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $582,100 to $430,500. Prepare an analysis showing whether the old machine should be retained or replaced. (Ifan 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.) Net 6-Year Income Increase Decrease) Retain Equipment Replace Equipment Variable manufacturing costs New machine cost Total The old factory machine should be