Business, 09.11.2019 03:31 jimmymurray29

Widgets inc. is thinking about replacing a piece of manufacturing equipment with a remaining useful life of three years. the book value of the equipment is $25,000, and the machine could be sold in its current condition for $7,000. the new machine would cost $83,000 and would have no salvage value at the end of its three-year useful life. with the new machine, widgets’ variable manufacturing costs would drop from $189,500 to $169,900 per year. if widgets opts to buy the new machine,
(a) it will see a $58,800 increase in income over the next three years.
(b) it will be recording a loss of $25,000 on the current machine.
(c) it will see a $24,200 decrease in income over the next three years.
(d) its total variable manufacturing costs over the next three years will be $58,800 lower than with the current machine.

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Widgets inc. is thinking about replacing a piece of manufacturing equipment with a remaining useful...

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