Xu Company is considering replacing one of its manufacturing machines. The machine has a book value of $44,000 and a remaining useful life of 4 years, at which time its salvage value will be zero. It has a current market value of $54,000. Variable manufacturing costs are $33,700 per year for this machine. Information on two alternative replacement machines follows.

	Alternative A			Alternative B
Cost	$	117,000		$	118,000
Variable manufacturing costs per year		22,700			10,700

Calculate the total change in net income if Alternative A is adopted. (Input all amounts as positive values, except cash outflows and any negative total change in net income which should be indicated by a minus sign. Omit the "$" sign in your response.)

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	$

Calculate the total change in net income if Alternative B is adopted. (Input all amounts as positive values, except cash outflows and any negative total change in net income which should be indicated by a minus sign. Omit the "$" sign in your response.)

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	$

Should Xu keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xu purchase?

	Alternative B
	Alternative A
	Keep the manufacturing machine