Using incremental analysis, determine if the old elevator should be replaced. (Enter negative amounts using either a negative Retain Old Elevator Replace Old Elevator Net Income Increase (Decrease) * Variable operating costs Fixed operating costs id New elevator cost Salvage on old elevator Totals Revenues Less costs: x Variable costs Fixed costs Selling & administrative Depreciation PX Operating income Less: Loss on old elevator Net income Problem 12-4 Last year (2016), Marigold Condos installed a mechanized elevator for its tenants. The owner of the company, Ron Richter, recently returned from an industry equipment exhibition where he watched a computerized elevator demonstrated. He was impressed with the elevator's speed, comfort of ride, and cost efficiency. Upon returning from the exhibition, he asked his purchasing agent to collect price and operating cost data on the new elevator. In addition, he asked the company's accountant to provide him with cost data on the company's elevator. This information is presented below. New Elevator Old Elevator $104,000 Purchase price Estimated salvage value Estimated useful life Depreciation method Annual operating costs other than depreciation: Variable $161,000 O 4 years Straight-line 5 years Straight-line $35,200 22,300 $9,000 8,500 Fixed Annual revenues are $240,000, and selling and administrative expenses are $29,000, regardless of which elevator is used. If the old elevator is replaced now, at the beginning of 2017, Marigold Condos will be able to sell it for $25,500. Your answer is correct. Determine any gain or loss if the old elevator is replaced. Loss on sale : 57700