Calculate the total change in net income

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Question - Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $42,000 and a remaining useful life of 5 years, at which time its salvage value will be zero. It has a current market value of $52,000. Variable manufacturing costs are $33,700 per year for this machine. Information on two alternative replacement machines follows.


Alternative A

Alternative B

Cost

$115,000

$116,000

Variable manufacturing costs per year

22,600

10,700

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

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

Reference no: EM132060075

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