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Calculate the total change in net income

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Question - Xu Company is considering replacing one of its manufacturing machines. The machine has a book value of $45,000 and a remaining useful life of 4 years, at which time its salvage value will be zero. It has a current market value of $55,000. Variable manufacturing costs are $34,000 per year for this machine. Information on two alternative replacement machines follows.

Alternative A Alternative B

Cost $ 115,000 $ 125,000 

Variable manufacturing costs per year 22,000 12,000 

Calculate the total change in net income if Alternative A is adopted.

Reference no: EM131808041

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