A year ago, Jucky Cola Corporation bought a stamping machine to make the cans for its cola. The cost of the machine was $60,000. The machine has a useful life of 5 years and a salvage value of zero at the end of those five years. Annual depreciation on the machine is $12,000. One year of depreciation has been recorded. The variable manufacturing cost of producing the cans is $0.05 per can. The only fixed manufacturing cost is the annual depreciation of $12,000 on the stamping machine. Jucky needs 200,000 cans annually. The Stamp Company recently gave Jucky an offer to supply all of its can needs for the next four years at $0.07 per can. If Jucky buys from The Stamp, the stamping machine would not be needed and would be sold for $35,000.
Required:
1. If Jucky buys from Stamp, what will be the total dollar increase or decrease in income for the next four years?
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