Differential increase or decrease in cost


Nighthawk Inc. is considering disposing of a machine with a book value of $22,500 and an estimated remaining life of three years. The old machine can be sold for $6,250. A new machine with a purchase price of $68,750 is being considered as a replacement. It will have a useful life of three years and no residual value. It is estimated that the annual variable manufacturing costs will be reduced from $43,750 to $20,000 if the new machine is purchased. The net differential increase or decrease in cost for the entire three years for the new equipment is?

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: Differential increase or decrease in cost
Reference No:- TGS0700080

Expected delivery within 24 Hours