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ACC-561 Ridley Company

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Question;Ridley Company has a factory machine with a book value of $84,900 and a remaining useful life of 5 years. A new machine is available at a cost of $197,100. This machine will have a 5-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $645,300 to $445,800.Prepare an analysis showing whether the old machine should be retained or replaced.(If an amount reduces the net income for Increase (Decrease) column then enter with a negative sign preceding the number e.g. -15,000 or parenthesis, e.g. (15,000). Enter all other amounts in all other columns as positive and subtract where necessary.);RetainEquipment;ReplaceEquipment;Net 5-YearIncomeIncrease(Decrease);Variable manufacturing costs;$;$;$New machine cost;Total;$;$;$;The old factory machine should bereplacedretained.

 

Paper#44169 | Written in 18-Jul-2015

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