Question

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Your answer is partially correct. Bryant Company has a factory machine with a book value of $87.400 and a remaining useful life of 7 years. It can be sold for $29,200. A new machine is available at a cost of $346,000. This machine will have a 7-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $622,000 to $565,000. 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 eg.-45 or parentheses es (451) Retain Equipment Replace Equipment Net Income Increase (Decrease) Variable manufacturing costs $ 4354000 i $ 4165000 $ 199000 New machine cost i 346000 i (346000 Sell old machine (292001 29200 Total 4354000 4481800 (127800 The old factory machine should be replaced e Textbook and Media Save ferater Attempts: 1 of 2 used Sun An 2 3 5 6 7 8 9 0 W R T 0 P S D F G H J К. C V B N M М. # ommand Command option

Answer 1

Answer

· Requirement asked

	Retain Equipment	Replace Equipment	Net Increase (Decrease)
Variable manufacturing costs	$4,354,000	$3,955,000 [$565000 x 7 years]	$399,000
New machine cost		$346,000	($346,000)
Sell old machine		($29,200)	$29,200
Total	$4,354,000	$4,271,800	$82,200

The old factory machine should be REPLACED.