Novak Company has a factory machine with a book value of $168,000 and a remaining useful...

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Novak Company has a factory machine with a book value of $168,000 and a remaining useful life of 4 years. A new machine is available at a cost of $252,000. This machine will have a 4-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $593,500 to $507,000. Prepare an analysis that shows whether Novak should retain or replace the old machine. (If an amount reduces the net income then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) Variable costs New machine cost Keep Equipment The old factory machine should be replaced retained Replace Equipment Net Income Increase (Decrease) Novak Company has a factory machine with a book value of $168,000 and a remaining useful life of 4 years. A new machine is available at a cost of $252,000. This machine will have a 4-year useful life with no salvage value. The new machine will lower annual variable manufacturing costs from $593,500 to $507,000. Prepare an analysis that shows whether Novak should retain or replace the old machine. (If an amount reduces the net income then enter with a negative sign preceding the number or parenthesis, e.g. -15,000, (15,000).) Variable costs New machine cost Keep Equipment The old factory machine should be replaced retained Replace Equipment Net Income Increase (Decrease)

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SOLUTION To determine whether Novak should retain or replace the old machine we need to compare the ... View the full answer