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Managerial Accounting

remaining useful life of ve years, at which time its salvage value will be zero. It has a current market value of $54,000. Variable 1 2 Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $44,000 and a manufacturing costs are $33,100 per year for this machine. Information on two alternative replacement machines follows. Alternative 1; alternative B Cost $115,000 $115,000 Variable manufacturing costs per year 22,500 10,500 Calculate the total change in net income if Alternative A, B is adopted. Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xinhong purchase? Complete this question by entering your answers in the tabs below. Alternative A Alternative B Xinhong Purchase Calculate the total change in net income if Alternative A is adopted. (Cash outflows should be indicated by a minus sign.) Cost to buy new machine Cash received to trade in old machine Reduction in variable manufacturing costs Total change in net income Alternative B > Alternative A Alternative B Xinhong Purchase Calculate the total change in net income if Alternative B is adopted. (Cash outflows should be indicated by a minus sign.) ALTERNATIVE B: INCREASE OR (DECREASE) IN NET INCOME Cost to buy new machine Cash received to trade in old machine Reduction in variable manufacturing costs Total change in net income Alternative A Alternative B Xinhong Purchase Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new machine should Xinhong purchase? Which option should Xinhong choose?

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