Boyer Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $78,100, the
Present Operations |
Proposed Operations |
|||
Sales | $247,600 | $247,600 | ||
Direct materials | $84,300 | $84,300 | ||
Direct labor | 58,600 | — | ||
Power and maintenance | 5,500 | 28,900 | ||
Taxes, insurance, etc. | 2,000 | 6,500 | ||
Selling and administrative expenses | 58,600 | 58,600 | ||
Total expenses | $209,000 | $178,300 |
a. Prepare a differential analysis dated May 4 to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss.
Differential Analysis | |||
Continue 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) | |||
Costs: | |||
Purchase price | |||
Direct materials (5 years) | |||
Direct labor (5 years) | |||
Power and maintenance (5 years) | |||
Taxes, insurance, etc. (5 years) | |||
Selling and admin. expenses (5 years) | |||
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