Calculate the total change in net income

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Question - Xu Company is considering replacing one of its manufacturing machines. The machine has a book value of $38,000 and a remaining useful life of 4 years, at which time its salvage value will be zero. It has a current market value of $48,000. Variable manufacturing costs are $33,200 per year for this machine. Information on two alternative replacement machines follows.

 

Alternative A

Alternative B

Cost

$116,000

$113,000

Variable manufacturing costs per year

22,700

11,000

Calculate the total change in net income if Alternative A is adopted.

Reference no: EM131877222

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