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Sunland Company has a factory machine with a book value of $93,000 and a remaining useful life of 5 years. It can be sold for $33,400. A new machine is available at a cost of $363,600. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $610,700 to $522,000. Prepare an analysis showing whether the old machine should be retained or replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e g -45 or parentheses e a (45))

Sunland Company has a factory machine with a book value of $93,000 and a remaining useful life of 5 years. It can be sold for $33,400. A new machine is available at a cost of $363,600. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $610,700 to $522,000. Prepare an analysis showing whether the old machine should be retained or replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e g -45 or parentheses e a (45))

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Sunland Company has a factory machine with a book value of $93,000 and a remaining useful life of 5 years. It can be sold for $33,400. A new machine is available at a cost of $363,600. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $610,700 to $522,000. Prepare an analysis showing whether the old machine should be retained or replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Variable manufacturing costs New machine cost Sell old machine Total $ $ The old factory machine should be Retain Equipment $ Replace Equipment $ $ LA Net Income Increase (Decrease)
Transcribed Image Text:Sunland Company has a factory machine with a book value of $93,000 and a remaining useful life of 5 years. It can be sold for $33,400. A new machine is available at a cost of $363,600. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $610,700 to $522,000. Prepare an analysis showing whether the old machine should be retained or replaced. (In the first two columns, enter costs and expenses as positive amounts, and any amounts received as negative amounts. In the third column, enter net income increases as positive amounts and decreases as negative amounts. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Variable manufacturing costs New machine cost Sell old machine Total $ $ The old factory machine should be Retain Equipment $ Replace Equipment $ $ LA Net Income Increase (Decrease)
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