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Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $44,000 ar remaining useful life of five years,
Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $44,000 ar remaining useful life of five years, at which time its salvage value will be zero. It has a current market value of $54,000. Varia manufacturing costs are $33,900 per year for this machine. Information on two alternative replacement machines follows. Alternative A $116,000 22,400 Alternative B $115,000 Cost Variable manufacturing costs per year 10,200 Calculate the total change in net income if Alternative A, B is adopted. Should Xinhong keep or replace its manufacturing ma the machine should be replaced, which alternative new machine should Xinhong purchase? Complete this question by entering your answers in the tabs below. Alternative A Alternative B Xinhong Purchase Calculate the total change in net income if Alternative A is adopted. (Cash outflows should be indicated by a minus sign.) ALTERNATIVE A: INCREASE OR (DECREASE) IN NET INCOME Cost to buy new machine Cash received to trade in old machine Reduction in variable manufacturing costs Total change in net income Alternative A Alternative B > Alternative A Alternative B Xinhong Purchase Calculate the total change in net income if Alternative B is adopted. (Cash outflows should be i ALTERNATIVE B: INCREASE OR (DECREASE) IN NET INCOME Cost to buy new machine Cash received to trade in old machine Reduction in variable manufacturing costs Total change in net income
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