Business, 26.08.2021 20:20 jairopanda8

Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $38,000 and a remaining useful life of five years, at which time its salvage value will be zero. It has a current market value of $48,000. Variable manufacturing costs are $33,800 per year for this machine. Information on two alternative replacement machines follows: Alternative A Alternative B
Cost 117,000 111,000
Variable manufacturing costs per year 22,600 10,600

Required:
a. Calculate the total change in net income if Alternative A is adopted.
b. Calculate the total change in net income if Alternative B is adopted.
c. Should Xinhong keep or replace the machine? If the decision is to replace, which alternative should they choose?

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