Differential Analysis Report for Machine Replacement Lone Wolf Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $94,000, the accumulated depreciation is $37,600, 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 $177,100. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on current and proposed operations:   CurrentOperations ProposedOperations Sales $298,000   $298,000   Direct materials $101,500   $101,500   Direct labor 70,500   23,500   Power and maintenance 6,600   11,300   Taxes, insurance, etc. 2,400   7,800   Selling and administrative expenses 70,500   70,500   Total expenses $251,500   $214,600   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. LONE WOLF TECHNOLOGIES Replace Machine Differential Analysis Report Annual costs and expenses—present machine $ Annual costs and expenses—new machine     $ Number of years applicable ×    $ Cost of new machine     $ Annual net differential decrease in costs and expenses—new machine $ b.  Based only on the data presented, should the proposal be accepted?  c.  What are some of the other factors that should be considered before a final decision is made? Do both present and proposed operations provide the same capacity? What are the opportunity costs associated with alternative uses of the $177,100 outlay required to purchase the automatic machine? Is the product improved by using automatic machinery? What is the book value of the manually operated machine that will be replaced? Select the relevant factor(s) from the list above.

A machine with a book value of $250,800 has an estimated 6-year life. A proposal is offered to sell the old machine for $217,300 and replace it with a new machine at a cost of $284,000. The new machine has a 6-year life with no residual value. The new machine would reduce annual direct labor costs from $49,700 to $39,800. Prepare a differential analysis dated October 3 on whether to Continue with Old Machine (Alternative 1) or Replace Old Machine (Alternative 2). If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) April 11 Continue with Replace Old Differential Old Machine Machine Effect (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine Costs: Purchase price Direct labor (6 years) Profit (loss) Should the company continue with the old machine (Alternative 1) or replace the old machine…

Replace Equipment A machine with a book value of $251,700 has an estimated six-year life. A proposal is offered to sell the old machine for $214,200 and replace it with a new machine at a cost of $281,500. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $50,400 to $40,300. a. Prepare a differential analysis dated April 11 on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) April 11 Continue Replace Differential with Old Old Effects Machine Machine (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine $ Costs: Purchase price Direct labor (6 years) Profit (Loss) b. Should the company continue with the old machine (Alternative 1) or replace the old machine…

Your company is considering the purchase of a new 623K Wheel Tractor-Scraper. Use the following information to calculate the hourly owning costs, hourly operating costs, and total owning and operating costs.  -         Delivered price (with tires): $420,000 -         Cost of Tires: $30,000 and their life is determined by the average operation in zone B. -         Salvage value is zero - the equipment is new and it is anticipated to be used for 5 years, until end of its service life. -         Anticipated operating hours per year: 2,000 hrs/yr -         Simple interest rate for purchase loan: 12% -         Annual cost of Insurance: $5,500 (See optional method) -         Property tax rate: 2% -         Fuel use will be average value in medium range -         Cost of fuel: $3.10 per gallon -         Hourly Maintenance Cost: $5.00 per hour -         Repair cost: $11.00 per hour -         Operator cost (with fringes): $75 per hour -         No undercarriage or special wear items costs…

Required information [The following information applies to the questions displayed below.] University Car Wash purchased new soap dispensing equipment that cost $222,000 including installation. The company estimates that the equipment will have a residual value of $21,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours. Actual use per year was as follows: Year 1 Hours Used 2,700 2 1,500 3 1,600 4 2,400 5 2,200 6 1,600 Required: 1. Prepare a depreciation schedule for six years using the straight-line method. (Do not round your intermediate calculations.)

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 is $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 accumulated 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 Operations $193,700 $66,000 45,800 a. Prepare a differential analysis dated May 4 to determine…

Replace Equipment A machine with a book value of $247,100 has an estimated six-year life. A proposal is offered to sell the old machine for $216,800 and replace it with a new machine at a cost of $280,700. The new machine has a six-year life with no residual value. The new machine would reduce annual direct labor costs from $50,700 to $40,600. a. Prepare a differential analysis dated April 11 on whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). If an amount is zero, enter "0". Use a minus sign to indicate subtracted or negative numbers or a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) April 11   Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) Differential Effect on Income (Alternative 2) Revenues:       Proceeds from sale of old machine $fill in the blank 1d230a036f95fc2_1 $fill in the blank 1d230a036f95fc2_2 $fill in the blank…

Your Company has a machine that it uses to make 200,000 units of a component used in its final product. 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 per unit variable manufacturing cost of producing the component is $0.05. The only fixed manufacturing cost is the annual depreciation of $12,000 on the stamping machine. Another Company recently offer to supply all of this component for the next four years at $0.07 per unit. If Your Company accepts the offer, the machine would not be needed and could be sold for $35,000. If the order is accepted, what is the total increase or decrease in income over the next four years?

Required information [The following information applies to the questions displayed below.] University Car Wash purchased new soap dispensing equipment that cost $249,000 including installation. The company estimates that the equipment will have a residual value of $25,500. University Car Wash also estimates it will use the machine for six years or about 12,500 total hours. Actual use per year was as follows: Year 1 2 Year 1 2 3 4 5 6 Total 23456 3 4 5 6 Hours Used 2,900 1,800 1,900 2,100 1,900 1,900 2. Prepare a depreciation schedule for six years using the double-declining- balance method. (Do not round your intermediate calculations.) UNIVERSITY CAR WASH Depreciation Schedule-Double-Declining-Balance End of Year Amounts Depreciation Accumulated Expense Depreciation Book Value