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1054 Chapter 23 Relevant Costing for Managerial Decisions Exercise 23-12 Keep or replace d A1 Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $45,000 and a remaining useful life of five years, at which time its salvage value will be zero. It has a cur- rent market value of $52,000. Variable manufacturing costs are $36,000 per year for this machine. Information on two alternative replacement machines follows. Should Xinhong keep or replace its manufacturing ma- chine? If the machine should be replaced, which alternative new machine should Xinhong purchase? Alternative A Alternative B Cost. Variable manufacturing costs per year $115,000 19.000 $125,000 15,000 1