Please show me how to find the reduction in variable manufacturing costs.

Please show me how to find the reduction in variable manufacturing costs.

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Xu Company is considering replacing one of its manufacturing machines. The machine has a book value of $38,000
and a remaining useful life of 4 years, at which time its salvage value will be zero. It has a current market value of
$48,000. Variable manufacturing costs are $33,200 per year for this machine. Information on two alternative
replacement machines follows.
Alternative
A
Alternative B
Cost
$
116,000
$
113,000
Variable
manufactu
ring costs
per year
22,700
11,000
Calculate the total change in net income if Alternative A is adopted.

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