Kobe company has a factory machine with a book value of

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Reference no: EM13578146

Kobe Company has a factory machine with a book value of $88,520 and a remaining useful life of 5 years. It can be sold for $25,550. A new machine is available at a cost of $246,830. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $745,420 to $622,620. Prepare an analysis showing whether the old machine should be retained or replaced. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

	Retain Equipment	Replace Equipment	Net 5-Year Income Increase (Decrease)
Variable manufacturing costs for 5 years	$	$	$
New machine cost
Sell old machine
Total	$	$	$

The old factory machine should be retained replaced.

Reference no: EM13578146

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