Question

s.com/courses/28179/askonment2214890modle tem id-9487433 Question 5 View Policies Current Attempt in Progress Sarasota Company has a factory machine with a book value of $86,300 and a remaining useful life of 7 years, It can be sold for $33,500 A new machine is availab at a cost of $359000 This machine will have a 7-year useful life with ro salvage value. The new machine wil lower annal variable manufacturing costs from $623.300 to 5461 800 Prepare an analysis showing whether the old machine sheuld be retained pr replaced, in the first two columns enter costs and expenses as positive amounts, and any omounts received os neagtive amounts. In the third cokmn enter net income increases as positive amounts and decreases as negative omounts Enter negative amounts using either a negative sign preceding the number eg 45 or parentheses eg f45) port Retain Replace Equipment Net income Equipment Increase Decrease) Variable manufacturing.costs New machine cast 359000 Sell old machine Total

Answer 1

	Retain Equipment	Replace Equipment	Net income increase(decrease)
Variable manufacturing costs	4363100	3232600	1130500
New machine cost	0	359000	-359000
Sell old machine	0	-33500	33500
Total	4363100	3558100	805000
The machine should be replaced.
Workings:
	Retain Equipment	Replace Equipment
Variable manufacturing costs	=623300*7	=461800*7