Homework Answers
Incremental income from replacing machine
| Savings in variable manufacturing costs (21,500 x 5) | 107,500 |
| Trading in of old machine | 75,000 |
| Total income | 182,500 |
| Cost of new machine | - 122,500 |
| Incremental income | $60,000 |
Old machine should be replaced by the new machine.
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