Differential Analysis Report for Machine Replacement White Noise Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $71,700, the accumulated depreciation is $28,700, its remaining useful lit years, and its residual value is zero. A proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $134,900. The automatic machine has an estimated useful life of five years and no s residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on current and proposed operations: Sales Direct materials Direct labor Power and maintenance Taxes, insurance, etc. Selling and administrative expenses Total expenses Current Proposed Operations Operations $227,300 $227,300 $77,400 53,800 5,000 1,800 Number of years applicable Annual costs and expenses-present machine Annual costs and expenses-new machine Cost of new machine 53,800 $191,800 $77,400 a. Prepare a differential analysis report for the proposal to replace the machine. Include in the analysis both the net differential change in costs anticipated over the five years and the net annual differential change in costs anticipated. WHITE NOISE TECHNOLOGIES INC. Replace Machine Differential Analysis Report 17,900 8,600 6,000 53,800 $163,700 Annual pot differential decrease in corts and expenses pox machine Globobobo
Differential Analysis Report for Machine Replacement White Noise Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $71,700, the accumulated depreciation is $28,700, its remaining useful lit years, and its residual value is zero. A proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $134,900. The automatic machine has an estimated useful life of five years and no s residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on current and proposed operations: Sales Direct materials Direct labor Power and maintenance Taxes, insurance, etc. Selling and administrative expenses Total expenses Current Proposed Operations Operations $227,300 $227,300 $77,400 53,800 5,000 1,800 Number of years applicable Annual costs and expenses-present machine Annual costs and expenses-new machine Cost of new machine 53,800 $191,800 $77,400 a. Prepare a differential analysis report for the proposal to replace the machine. Include in the analysis both the net differential change in costs anticipated over the five years and the net annual differential change in costs anticipated. WHITE NOISE TECHNOLOGIES INC. Replace Machine Differential Analysis Report 17,900 8,600 6,000 53,800 $163,700 Annual pot differential decrease in corts and expenses pox machine Globobobo
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7EB: An auto repair company needs a new machine that will check for defective sensors. The machine has an...
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