Differential Analysis for Machine Replacement Boyer Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $61,100, the accumulated depreciation $24,400, its remaining useful life is five 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 $127,100. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulat the following annual data on present and proposed operations: Sales Direct materials Direct labor Power and maintenance Taxes, insurance, etc. Selling and administrative expenses Total expenses Revenues: Sales (5 years) Costs: Present Proposed Operations Operations $193,700 $66,000 45,800 4,300 1,500 45,800 Purchase price Direct materials (5 years) Direct labor (5 years) 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. Power and maintenance (5 years) Taxes, insurance, etc. (5 years) Selling and admin. expenses (5 years) Profit (Loss) Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 4 $163,400 Continue with Old $193,700 $66,000 Replace Old Machine c. Differences in capacity between the two alternatives is 22,600 5,100 45,800 $139,500 b. Based only on the data presented, should the proposal be accepted? Machine (Alternative 1) (Alternative 2) (Alternative 2) Differential Effects to consider before a final decision is made.

A machine with a book vale of $305,000 has an estimated 6-year life. A proposal is offered to sell the old machine for $390,000 and replace it with a new machine at a cost of $473,000. The new machine has a 6-year life with no residual value. The new machine would reduce annual direct labor costs from $91,000 to $74,000. Prepare a differential analysis dated October 3 on whether to Continue with Old Machine (Alternative 1) or Replace Old Machine (Alternative 2).

Differential Analysis for Machine Replacement 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 $73,400, the accumulated depreciation is $29,400, its remaining useful life is five 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 $152,700. The automatic machine has an estimated useful life of five 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 $232,700   $232,700   Direct materials $79,300   $79,300   Direct labor 55,100   —   Power and maintenance 5,100   27,200   Taxes, insurance, etc. 1,800   6,100   Selling and administrative expenses…

eBook 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 $57,900, the accumulated depreciation is $23,200, its remaining useful life is five 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 $109,000. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on current and proposed operations:   CurrentOperations ProposedOperations Sales $183,500   $183,500   Direct materials $62,500   $62,500   Direct labor 43,400   14,500   Power and maintenance 4,100   6,900   Taxes, insurance, etc. 1,400   4,800   Selling and administrative expenses 43,400   43,400   Total expenses…

Assume Plain Ice Cream Company, Incorporated, in Ithaca, NY, bought a new ice cream production kit (pasteurizer/homogenizer, cooler, aging vat, freezer, and filling machine) at the beginning of the year at a cost of $28,000. The estimated useful life was four years, and the residual value was $2,560. Assume that the estimated productive life of the machine was 10,600 hours. Actual annual usage was 4,240 hours in Year 1; 3,180 hours in Year 2; 2,120 hours in Year 3; and 1,060 hours in Year 4. Required: 1. Complete a separate depreciation schedule for each of the alternative methods. a. Straight-line. b. Units-of-production. c. Double-declining-balance. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Complete a depreciation schedule using the straight-line method. Year Depreciation Expense At acquisition 1 2 3 Accumulated Depreciation Net Book Value

Differential Analysis for Machine Replacement Proposal Flint Tooling Company is considering replacing a machine that has been used in its factory for four years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows: Old Machine Cost of machine, 10-year life $106,700 Annual depreciation (straight-line) 10,670 Annual manufacturing costs, excluding depreciation 39,100 Annual nonmanufacturing operating expenses 12,900 Annual revenue 94,300 Current estimated selling price of the machine 36,700     New Machine Cost of machine, six-year life $138,000 Annual depreciation (straight-line) 23,000 Estimated annual manufacturing costs, exclusive of depreciation 18,900 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Required: 1.  Prepare a differential analysis as of November 8 comparing operations…

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Lacey Manufacturing is considering replacing one of its machines. You are provided with the following information:             Old Machine:             Original purchase price                    $100,000             Est. annual variable costs                  225,000             Est. selling price                                   25,000             Est. remaining useful life                    5 years         New Machine:             Purchase price                                 $250,000             Est. annual variable costs                  150,000             Est. residual value                                         0             Est. useful life                                      5 years               Determine if the company should keep using the old machine or sell it and replace it with the new machine. Show your work to justify your answer

Assume Plain Ice Cream Company, Incorporated, in Ithaca, NY, bought a new ice cream production kit (pasteurizer/homogenizer, cooler, aging vat, freezer, and filling machine) at the beginning of the year at a cost of $22,000. The estimated useful life was four years, and the residual value was $2,000. Assume that the estimated productive life of the machine was 10,000 hours. Actual annual usage was 4,000 hours in Year 1; 3,000 hours in Year 2; 2,000 hours in Year 3; and 1,000 hours in Year 4. Required: 1. Complete a separate depreciation schedule for each of the alternative methods. a. Straight-line. b. Units-of-production. c. Double-declining-balance. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Year At acquisition 1 2 3 4 Req 1C Complete a depreciation schedule using the straight-line method. Depreciation Accumulated Expense Net Depreciation Book Value