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Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $41.000 and a remaining useful life of
Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $41.000 and a remaining useful life of five years, at which time its salvage value will be zero. It has a current market value of $51,000. Variable manufacturing costs are $33,800 per year for this machine. Information on two alternative replacement machines follows. Cest Variable manufacturing costs per year Alternative A $121,000 22,800 Alternati $119,000 10,000 Calculate the total change in net income if Alternative A, B is adopted. Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xinhong purchase? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Return to question INCOME $(122.000) 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 Cost to buy new machine Cash received to trade in old machine Reduction in variable manufacturing costs 51,000 57,500 Total change in net income $ (13,500) Prev 1 of 5 Next > 547 PM
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