Exercise 23-10 (Algo) Keep or replace LO P5 Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $49,000 and a remaining useful life of five years. It can be sold now for $59,000 Variable manufacturing costs are $49,000 per year for this old machine Information on two alternative replacement machines follows The expected useful life of each replacement machine is five years Purchase price Variable manufacturing costs per year Machine A $ 125,000 20,000 Machine B $ 137,000 13,000 (a) Compute the income increase or decrease from replacing the old machine with Machine A (b) Compute the income increase or decrease from replacing the old machine with Machine B (c) Should Lopez keep or replace its old machine? (d) if the machine should be replaced, which new machine should Lopez purchase?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
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Chapter1: Financial Statements And Business Decisions
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this is a 2 part question
Exercise 23-10 (Algo) Keep or replace LO P5
Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $49,000 and a
remaining useful life of five years. It can be sold now for $59,000. Variable manufacturing costs are $49,000 per year for this old
machine Information on two alternative replacement machines follows The expected useful life of each replacement machine is five
years.
Purchase price
Variable manufacturing costs per year
(a) Compute the income increase or decrease from replacing the old machine with Machine A
(b) Compute the income increase or decrease from replacing the old machine with Machine B
(c) Should Lopez keep or replace its old machine?
(d) If the machine should be replaced, which new machine should Lopez purchase?
Req A
Complete this question by entering your answers in the tabs below.
Revenues
Machine A: Keep or Replace Analysis
Req B
Compute the income increase or decrease from replacing the old machine with Machine A. (Amounts to be deducted should be
indicated with a minus sign.)
Costs
Sale of existing machine
Purchase of new machine
Variable manufacturing costs
Income (loss)
Req A
Costs
Req B
Req C and D
Machine B. Keep or Replace Analysis
Revenues
Sale of existing machine
Req C and D
Purchase of new machine
Variable manufacturing costs
Income (loss)
Complete this question by entering your answers in the tabs below.
Machine A
$ 125,000
20,000
$
$
Keep
Keep
Machine B
$ 137,000
13,000
0 $
D
Compute the income increase or decrease from replacing the old machine with Machine B. (Amounts to be deducted should be
indicated with a minus sign.)
0$
<Reg A
Replace
Replace
Income Increase
(Decrease) from
Replacing
0$
OS
ReqB >
Income Increase
(Decrease) from
Replacing
0
Req C and D >
Transcribed Image Text:this is a 2 part question Exercise 23-10 (Algo) Keep or replace LO P5 Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $49,000 and a remaining useful life of five years. It can be sold now for $59,000. Variable manufacturing costs are $49,000 per year for this old machine Information on two alternative replacement machines follows The expected useful life of each replacement machine is five years. Purchase price Variable manufacturing costs per year (a) Compute the income increase or decrease from replacing the old machine with Machine A (b) Compute the income increase or decrease from replacing the old machine with Machine B (c) Should Lopez keep or replace its old machine? (d) If the machine should be replaced, which new machine should Lopez purchase? Req A Complete this question by entering your answers in the tabs below. Revenues Machine A: Keep or Replace Analysis Req B Compute the income increase or decrease from replacing the old machine with Machine A. (Amounts to be deducted should be indicated with a minus sign.) Costs Sale of existing machine Purchase of new machine Variable manufacturing costs Income (loss) Req A Costs Req B Req C and D Machine B. Keep or Replace Analysis Revenues Sale of existing machine Req C and D Purchase of new machine Variable manufacturing costs Income (loss) Complete this question by entering your answers in the tabs below. Machine A $ 125,000 20,000 $ $ Keep Keep Machine B $ 137,000 13,000 0 $ D Compute the income increase or decrease from replacing the old machine with Machine B. (Amounts to be deducted should be indicated with a minus sign.) 0$ <Reg A Replace Replace Income Increase (Decrease) from Replacing 0$ OS ReqB > Income Increase (Decrease) from Replacing 0 Req C and D >
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