a. Prepare a differential analysis dated May 4 to determine whether to Continue with Old Machine (Alternative 1) or Replace Old Machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential AnalysisContinue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)May 4 Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) Differential Effects (Alternative 2) Revenues: Sales (5 years) $fill in the blank 67b7a8fe007a05d_1 $fill in the blank 67b7a8fe007a05d_2 $fill in the blank 67b7a8fe007a05d_3 Costs: Purchase price fill in the blank 67b7a8fe007a05d_4 fill in the blank 67b7a8fe007a05d_5 fill in the blank 67b7a8fe007a05d_6 Direct materials (5 years) fill in the blank 67b7a8fe007a05d_7 fill in the blank 67b7a8fe007a05d_8 fill in the blank 67b7a8fe007a05d_9 Direct labor (5 years) fill in the blank 67b7a8fe007a05d_10 fill in the blank 67b7a8fe007a05d_11 fill in the blank 67b7a8fe007a05d_12 Power and maintenance (5 years) fill in the blank 67b7a8fe007a05d_13 fill in the blank 67b7a8fe007a05d_14 fill in the blank 67b7a8fe007a05d_15 Taxes, insurance, etc. (5 years) fill in the blank 67b7a8fe007a05d_16 fill in the blank 67b7a8fe007a05d_17 fill in the blank 67b7a8fe007a05d_18 Selling and admin. expenses (5 years) fill in the blank 67b7a8fe007a05d_19 fill in the blank 67b7a8fe007a05d_20 fill in the blank 67b7a8fe007a05d_21 Profit (loss) $fill in the blank 67b7a8fe007a05d_22 $fill in the blank 67b7a8fe007a05d_23 $fill in the blank 67b7a8fe007a05d_24 b. Based only on the data presented, should the proposal be accepted? c. Differences in capacity between the two alternatives is to consider before a final decision is made.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

Kim Kwon Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $80,700, the accumulated depreciation is $32,300, its remaining useful life is 5 years, and its residual value is negligible. On May 4 of the current year, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $167,900. The automatic machine has an estimated useful life of 5 years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on present and proposed operations:

	Present Operations	Proposed Operations
Sales	$255,800	$255,800
Direct materials	$87,200	$87,200
Direct labor	60,500	—
Power and maintenance	5,600	29,900
Taxes, insurance, etc.	2,000	6,700
Selling and administrative expenses	60,500	60,500
Total expenses	$215,800	$184,300

a. Prepare a differential analysis dated May 4 to determine whether to Continue with Old Machine (Alternative 1) or Replace Old Machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Differential AnalysisContinue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)May 4

	Continue with Old Machine (Alternative 1)	Replace Old Machine (Alternative 2)	Differential Effects (Alternative 2)
Revenues:
Sales (5 years)	$fill in the blank 67b7a8fe007a05d_1	$fill in the blank 67b7a8fe007a05d_2	$fill in the blank 67b7a8fe007a05d_3
Costs:
Purchase price	fill in the blank 67b7a8fe007a05d_4	fill in the blank 67b7a8fe007a05d_5	fill in the blank 67b7a8fe007a05d_6
Direct materials (5 years)	fill in the blank 67b7a8fe007a05d_7	fill in the blank 67b7a8fe007a05d_8	fill in the blank 67b7a8fe007a05d_9
Direct labor (5 years)	fill in the blank 67b7a8fe007a05d_10	fill in the blank 67b7a8fe007a05d_11	fill in the blank 67b7a8fe007a05d_12
Power and maintenance (5 years)	fill in the blank 67b7a8fe007a05d_13	fill in the blank 67b7a8fe007a05d_14	fill in the blank 67b7a8fe007a05d_15
Taxes, insurance, etc. (5 years)	fill in the blank 67b7a8fe007a05d_16	fill in the blank 67b7a8fe007a05d_17	fill in the blank 67b7a8fe007a05d_18
Selling and admin. expenses (5 years)	fill in the blank 67b7a8fe007a05d_19	fill in the blank 67b7a8fe007a05d_20	fill in the blank 67b7a8fe007a05d_21
Profit (loss)	$fill in the blank 67b7a8fe007a05d_22	$fill in the blank 67b7a8fe007a05d_23	$fill in the blank 67b7a8fe007a05d_24

b. Based only on the data presented, should the proposal be accepted?

c. Differences in capacity between the two alternatives is

to consider before a final decision is made.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.