Bryant Company has a factory machine with a book value of $93,100 and a remaining useful life of 5 years. It can be sold for $27,200. A new machine is available at a cost of $430,400. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $592,600 to $575,500. 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).)
| Retain
Equipment |
Replace
Equipment |
Net Income
Increase (Decrease) |
|||||
| Variable manufacturing costs | $ | $ | $ | ||||
| New machine cost | |||||||
| Sell old machine | |||||||
| Total | $ | $ | $ |
| The old factory machine should be
replacedretained
. |
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