Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $36,000 and a remaining useful life of four years, at which time its salvage value will be zero. It has a current market value of $46,000. Variable manufacturing costs are $33,400 per year for this machine. Information on two alternative replacement machines follows. Cost Variable manufacturing costs per year Alternative A $120,000 22,000 Alternative B $117,000 10,200 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? 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 $ 0 Alternative A Alternative B Xinhong Purchase Calculate the total change in net income if Alternative B is adopted. (Cash outflows should be indicated by a minus sign.) 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 $ 0 Alternative A Alternative B Xinhong Purchase Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xinhong purchase? Which option should Xinhong choose? Alternative B Xinhong Purchase Steeze Co. makes snowboards and uses the total cost approach in setting product prices. Its costs for producing 19,000 units follow. The company targets a profit of $490,200 on this product. Variable Costs per Unit Direct materials $ 118 Direct labor 43 Overhead 38 Selling 9 Fixed Costs Overhead $482,000 Selling 122,000 Administrative 346,000 1. Compute the total cost per unit. 2. Compute the markup percentage on total cost. (Round your final percentage answer to 1 decimal place.) 3. Compute the product's selling price using the total cost method. (Round your intermediate calculations and final answer to the nearest whole dollar amount.) 1. Total cost per unit 2. Markup percentage 3. Selling price % Rios Co. makes drones and uses the variable cost approach in setting product prices. Its costs for producing 22,000 units follow. The company targets a profit of $302,000 on this product. Variable costs per Unit Direct materials $ 72 Direct labor 42 Overhead 27 Selling 17 Fixed Costs (in total) Overhead $672,000 Selling 307,000 Administrative 287,000 1. Compute the variable cost per unit. 2. Compute the markup percentage on variable cost. (Round percentage answer to 2 decimal places.) 3. Compute the product's selling price using the variable cost method. (Round your intermediate percentage calculations and final answer to 2 decimal places.) 1. 2. Variable cost per unit Markup percentage Selling price % 3
