Xinhong Company is considering replacing one of its manufacturing machines. The machine has a book value of $41,000 and a remaining useful life of five years, at which time its salvage value will be zero. It has a current market value of $51,000. Variable manufacturing costs are $33,800 per year for this machine. Information on two alternative replacement machines follows. Alternative A Alternative B
Cost $ 115,000 $ 114,000
Variable manufacturing costs per year 22,800 10,800
1. Calculate the total change in net income if Alternative A is adopted. (Cash outflows should be indicated by a minus sign.)
2. Calculate the total change in net income if Alternative B is adopted. (Cash outflows should be indicated by a minus sign.)