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Gre4nikov [31]
2 years ago
15

Lopez Company is considering replacing one of its old manufacturing machines. The old machine has a book value of $47,000 and a

remaining useful life of five years. It can be sold now for $57,000. Variable manufacturing costs are $47,000 per year for this old machine. Information on two alternative replacement machines follows. The expected useful life of each replacement machine is five years.
Machine A Machine B
Purchase price$ 118,000$ 131,000
Variable manufacturing costs per year21,000 14,000
(a) Compute the income increase or decrease from replacing the old machine with Machine A.
(b) Compute the income increase or decrease from replacing the old machine with Machine B.
(c) Should Lopez keep or replace its old machine
Business
1 answer:
White raven [17]2 years ago
4 0

a) The income increase from replacing the old machine with Machine A is $21,800 ($56,400 - $44,600 + $10,000).

b) The income increase from <em>replacing the old machine</em> with Machine B is $26,200 ($56,400 - $40,200 + $10,000).

c) The Lopez Company <em>should replace its old machine</em>, preferably with Machine B.

Data and Calculations:

Current selling price =$57,000

Gain from the sale of old machine = $10,000 ($57,000 - $47,000)

                                                  Old Machine    Machine A     Machine B

Book value                                     $47,000

Purchase price                                                    $118,000        $131,000

Variable manufacturing costs        47,000           21,000            14,000

Estimated remaining useful life    5 years           5 years          5 years

Fixed costs per year                      $9,400        $23,600        $26,200

Total costs (variable + fixed)       $56,400        $44,600        $40,200

Comparative income increase       $0                $11,800         $16,200

Total income increase                    $0               $21,800        $26,200 ($16,200 + $10,000)

Thus, it is economically better for Lopez to sell its old machine, replacing it with Machine B, which reduces the total costs per year.

Learn more: brainly.com/question/15172069

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A machine purchased on 1/1/21 for $24,000 and on which $14,400 of Accumulated Depreciation has been recorded through 12/31/23 wa
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Answer:

Gain on disposal = $7600

Explanation:

As the machine is sold on 1 April 2024, we first need to update the depreciation expense and charge the depreciation to the date. The depreciation has been charged till 1 December 2023. So, we need to charge the depreciation for three more months.

The formula for depreciation expense under straight line method is,

Depreciation expense per year = (Cost - Salvage value) / Estimated useful life

Depreciation expense per year = (24000 - 0) / 5

Depreciation expense per year =  $4800 per year

Depreciation expense for three months = 4800 * 3/12 = $1200

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To calculate the gain or loss on disposal, we first need to determine the net book value of asset and deduct it from the cash received on disposal.

NBV = Cost - Accumulated depreciation

NBV = 24000 - 15600

NBV = $8400

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Gain on disposal = $7600

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In the movie contract, which side was the more successful negotiator? Can you think of any terms that either party left out? Are
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In the movie contract, the artist side was the most successful navigator. The party may be left out if the artist contract with the another film.

<h3>Who is navigator?</h3>

A negotiator is a person that either gets to an agreement with another person or assists others in reaching an agreement.

When two people can't correspond on something then, it's essential to call in a mediator. When two institutions unite, they can employ a negotiator to support them iron out the terms of the deal.

The artist was a more successful negotiator in a movie contract because he/she had spelled out all of the possible provisions for acting in a film. More conditions may have been included by the producer to bind the artist to the contract.

The producer may have added the following provisions to the movie contract before signing it. It includes that, If an artist arrives late on set, the producer has the authority to remove a penny from the artist's remuneration, and

If it is discovered that an artist has signed other film contracts, he or she will be held accountable for damages.

All the decisions should be made in a good faith by the artist and  producer. If the provisions were stated at the time of negotiation by both the parties.

Therefore, the reasonable word means the usual and the ordinary circumstances.

Learn more about the navigator, refer to:
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#SPJ1

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Option D

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