Bryant Company has a factory machine with a book value of $93,000 and a remaining useful life of 5 years. It can be sold for $33,400. A new machine is available at a cost of $363,600. This machine will have a 5-year useful life with no salvage value. The new machine brings annual variable manufacturing costs from $562,100 to $610,700. 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 EquipmentEquipment Increase (Decrease) Replace Net Income Variable manufacturing costs New machine cost Sell old machine g Total The old factory machine should be

Question

Business

Maritza Mahoney

10 October, 17:13

Bryant Company has a factory machine with a book value of $93,000 and a remaining useful life of 5 years. It can be sold for $33,400. A new machine is available at a cost of $363,600. This machine will have a 5-year useful life with no salvage value. The new machine brings annual variable manufacturing costs from $562,100 to $610,700. 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 EquipmentEquipment Increase (Decrease) Replace Net Income Variable manufacturing costs New machine cost Sell old machine g Total The old factory machine should be

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Answers (1)

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Salvatore Little · Answer 1

We don't have any information referring increase in production or a higher quality. Based only on costs, the old machine is cheaper, therefore better than the new one.

Explanation:

Giving the following information:

Bryant Company has a factory machine with a book value of $93,000 and a remaining useful life of 5 years. It can be sold for $33,400. A new machine is available for $363,600. This machine will have a 5-year useful life with no salvage value. The new machine brings annual variable manufacturing costs from $562,100 to $610,700.

Initial invest: 363,600 - 33,400 = 330,200

Increase in costs = (610,700 - 562,100) * 5 = 243,000

Total = $573,200

We don't have any information referring increase in production or a higher quality. Based only on costs, the old machine is cheaper, therefore better than the new one.