Crane Company has a machine that affixes labels to bottles. The machine has a book value of $65,600 and a remaining useful life of 3 years and no salvage value. A new, more efficient machine is available at a cost of $246,000 that will have a 3-year useful life with no salvage value. The new machine will lower annual variable production costs from $426,400 to $336,200.


Required:

Prepare an analysis showing whether the old machine should be retained or replaced.