Answer:
See the explanation for answer
Explanation:
Analysis showing whether the old machine should be retained or replaced is as prepared below:
Retain Replace Net Income
Equipment Equipment Increase(Decrease)
Variable manufacturing costs 43,63,100 32,32,600 11,30,500
New machine costs 0 3,59,000 -3,59,000
Sell old machine 0 -33,500 33,500
Total 43,63,100 35,58,100 8,05,000
The old factory machine should be replaced as there is increase in net income by 805,000 when old machine is replaced.
