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Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $42,000 ar remaining useful life of 5 years, at which time its salvage value will be zero. It has a current market value of $52,000. Variable manufacturing costs are $33,100 per year for this machine. Information on two alternative replacement machines follows Alternative A Alternative B Cost $124,0e0 22,800 $117,000 11,000 Variable manufacturing costs per year 1. Calculate the total change in net income if Alternative A and B is adopted. 2. Should Xinhong keep or replace its manufacturing machine? If the machine should be replaced, which alternative new ma should Xinhong purchase? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the total change in net income if Alternative A andB is adopted. (Cash outflows should be indicated by a minus sign.) INCREASE OR (DECREASE) IN NET INCOME ALTERNATIVE A: ALTERNATIVE B: Cost to buy new machine Cash received to trade in old machine Reduction in variable manufacturing costs 0 Total change in net income Required 2
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