Why old factory machine should be pixel.gifretained replaced


Kobe Company has a factory machine with a book value of $88,520 and a remaining useful life of 5 years. It can be sold for $25,550. A new machine is available at a cost of $246,830. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $745,420 to $622,620. Prepare an analysis showing whether the old machine should be retained or replaced. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)



Retain Equipment
Replace Equipment
Net 5-Year Income
Increase (Decrease)

Variable manufacturing costs for 5 years
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New machine cost
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Sell old machine
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    Total
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The old factory machine should be pixel.gifretained replaced.

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Accounting Basics: Why old factory machine should be pixel.gifretained replaced
Reference No:- TGS0682988

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