Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $46,00

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Lopez Company Is Considering Replacing One Of Its Old Manufacturing Machines The Old Machine Has A Book Value Of 46 00 1 (36.78 KiB) Viewed 49 times

Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $46,000 and a remaining useful life of four years. It can be sold now for $56,000. Variable manufacturing costs are $46,000 per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is five years Purchase price Variable sanufacturing costs per year Machine A $ 121,000 19,000 Machine B $ 136,000 15,000 (a) Compute the income increase or decrease from replacing the old machine with Machine A (b) Compute the income increase or decrease from replacing the old machine with Machine B. (c) Should Lopez keep or replace its old machine? (d) If the machine should be replaced, which new machine should Lopez purchase? Complete this question by entering your answers in the tabs below. ences Reg A ReQB Reg Cando Compute the income increase or decrease from replacing the old machine with Machine A (Amounts to be deducted should be indicated with a minus sign.) Income Increase Machine A: Keep or Replace Analysis Keep Replace (Decrease) from Replacing Revenues Sale of existing machine 5 of s 56,000 Costs Purchase of new machine 5 0 (121.000) Variable manufacturing CMS Income 165.000 165.000 $