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Homework answers / question archive / Le Journee Company is considering replacing a factory machine with a new machine
Le Journee Company is considering replacing a factory machine with a new machine. Le Journee Company has a factory machine that originally cost $150,000. It has a balance in Accumulated Depreciation of $110,000, so its book value is $40,000. It has a remaining useful life of three years. The company is considering replacing this machine with a new machine. A new machine is available that costs $170,000. It is expected to have zero salvage value at the end of its four-year useful life. If the new machine is acquired, variable manufacturing costs are expected to decrease from $105,000 to $60,000 and the old unit could be sold for $5,000. How much is the difference of total variable manufacturing costs between the option of retaining an old machine and buying a new machine? Answer: How much is the net income increase/decrease (please also consider the gain from selling the old machine)? Please give the number and explanation whether it is a decrease or increase. Answer: Will Le Journee Company retain the old machine? Answer:
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