Bonita Industries is contemplating the replacement of an old machine with a new one. The following information has been gathered:   Old Machine   New Machine Price $250000   $500000 Accumulated Depreciation 75000   -0- Remaining useful life 10 years   -0- Useful life -0-   10 years Annual operating costs $205000   $150000 If the old machine is replaced, it can be sold for $20000. The company uses straight-line depreciation with a zero salvage value for all of its assets. The net advantage (disadvantage) of replacing the old machine is $(50000) $(5000) $20500 $70000

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.