Sunland Company has a machine that affixes labels to bottles. The machine has a book value of $92,800 and a remaining useful life of 3 years and no salvage value. A new, more efficient machine is available at a cost of $348,000 that will have a 3-year useful life with no salvage value. The new machine will lower annual variable production costs from $603,200 to $475,600. 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 Income Change $ $ $ $
Sunland Company has a machine that affixes labels to bottles. The machine has a book value of $92,800 and a remaining useful life of 3 years and no salvage value. A new, more efficient machine is available at a cost of $348,000 that will have a 3-year useful life with no salvage value. The new machine will lower annual variable production costs from $603,200 to $475,600. 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 Income Change $ $ $ $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please answer this with explanation , computation for all steps clearly and correctly answer in text form
Transcribed Image Text:Sunland Company has a machine that affixes labels to bottles. The machine has a book value of $92,800 and a remaining useful life of 3
years and no salvage value. A new, more efficient machine is available at a cost of $348,000 that will have a 3-year useful life with no
salvage value. The new machine will lower annual variable production costs from $603,200 to $475,600.
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 Income Change
$
$
$
$
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