Please do not give image format Differential Analysis for Machine ReplacementRidgeway Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of themachine is $61,500, the accumulated depreciation is $24,600, its remaining useful life is 5 years, and its residual value is negligible. On October 1 of the currentyear, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $127,900. The automaticmachine has an estimated useful life of 5 years and no significant residual value. For use in evaluating the proposal, the managerial accountant accumulated thefollowing annual data on present and proposed operations:SalesDirect materialsDirect laborPower and maintenance.Taxes, insurance, etc.Selling and administrative expensesTotal expensesPresent ProposedOperations Operations$195,000 $195,000$66,400 $66,40046,1004,3001,50046,100$164,40022,8005,10046,100$140,400 a. Prepare a differential analysis dated October 1 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Prepare theanalysis 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.Revenues:Line Item DescriptionSales (5 years)Costs:Differential AnalysisContinue with (Alt. 1) or Replace (Alt. 2) Old MachineOctober 1Continue withOld Machine(Alternative 1)Purchase priceDirect materials (5 years))Direct labor (5 years)Power and maintenance (5 years)Taxes, Insurance, etc. (5 years).Selling and admin, expenses (5 years)Profit (loss)Replace Old Machine(Alternative 2)Differential Effects(Alternative 2)

Differential Analysis: Differential analysis is the process of comparing and contrasting the costs…

a. Prepare a differential analysis dated October 1 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. 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. Revenues: Line Item Description Sales (5 years) Costs: Differential Analysis Continue with (Alt. 1) or Replace (Alt. 2) Old Machine October 1 Continue with Old Machine (Alternative 1) Purchase price Direct materials (5 years) Direct labor (5 years) Replace Old Machine Differential Effects (Alternative 2) (Alternative 2) 00000 00000 00000

a. Prepare a differential analysis dated October 1 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. 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. Revenues: Line Item Description Sales (5 years) Costs: Differential Analysis Continue with (Alt. 1) or Replace (Alt. 2) Old Machine October 1 Continue with Old Machine (Alternative 1) Purchase price Direct materials (5 years) Direct labor (5 years) Replace Old Machine Differential Effects (Alternative 2) (Alternative 2) 00000 00000 00000

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 10E: Differential analysis for machine replacement Boyer Digital Components Company assembles circuit...

See similar textbooks

Similar questions

Differential analysis report for machine replacement proposal Catalina Tooling Company is considering replacing a machine that has been used in its factory for two 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: Annual nonmanufacturing operating expenses and revenue are not expected to be affected by the purchase of the new machine. Instructions List other factors that should be considered before a final decision is reached.
Jonfran Company manufactures three different models of paper shredders including the waste container, which serves as the base. While the shredder heads are different for all three models, the waste container is the same. The number of waste containers that Jonfran will need during the following years is estimated as follows: The equipment used to manufacture the waste container must be replaced because it is broken and cannot be repaired. The new equipment would have a purchase price of 945,000 with terms of 2/10, n/30; the companys policy is to take all purchase discounts. The freight on the equipment would be 11,000, and installation costs would total 22,900. The equipment would be purchased in December 20x4 and placed into service on January 1, 20x5. It would have a five-year economic life and would be treated as three-year property under MACRS. This equipment is expected to have a salvage value of 12,000 at the end of its economic life in 20x9. The new equipment would be more efficient than the old equipment, resulting in a 25 percent reduction in both direct materials and variable overhead. The savings in direct materials would result in an additional one-time decrease in working capital requirements of 2,500, resulting from a reduction in direct material inventories. This working capital reduction would be recognized at the time of equipment acquisition. The old equipment is fully depreciated and is not included in the fixed overhead. The old equipment from the plant can be sold for a salvage amount of 1,500. Rather than replace the equipment, one of Jonfrans production managers has suggested that the waste containers be purchased. One supplier has quoted a price of 27 per container. This price is 8 less than Jonfrans current manufacturing cost, which is as follows: Jonfran uses a plantwide fixed overhead rate in its operations. If the waste containers are purchased outside, the salary and benefits of one supervisor, included in fixed overhead at 45,000, would be eliminated. There would be no other changes in the other cash and noncash items included in fixed overhead except depreciation on the new equipment. Jonfran is subject to a 40 percent tax rate. Management assumes that all cash flows occur at the end of the year and uses a 12 percent after-tax discount rate. Required: 1. Prepare a schedule of cash flows for the make alternative. Calculate the NPV of the make alternative. 2. Prepare a schedule of cash flows for the buy alternative. Calculate the NPV of the buy alternative. 3. Which should Jonfran domake or buy the containers? What qualitative factors should be considered? (CMA adapted)
Differential Analysis for Machine Replacement Ridgeway Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $61,800, the accumulated depreciation is $24,700, its remaining useful life is 5 years, and its residual value is negligible. On October 1 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 $128,500. The automatic machine has an estimated useful life of 5 years and no significant residual value. For use in evaluating the proposal, the managerial 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 Present Proposed Operations Operations $195,900 $195,900 $66,700 $66,700 46,400 4,300 1,500 46,400 $165,300 Differential…
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 $88,800, the accumulated depreciation is $35,500, 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 $184,700. 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: PresentOperations ProposedOperations Sales $281,500 $281,500 Direct materials $95,900 $95,900 Direct labor 66,600 — Power and maintenance 6,200 32,900 Taxes, insurance, etc. 2,200 7,400 Selling and administrative expenses 66,600…
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 $78,700, the accumulated depreciation is $31,500, 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 $163,700. 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 $249,500 $249,500 Direct materials $85,000 $85,000 Direct labor 59,000 — Power and maintenance 5,500 29,100 Taxes, insurance, etc. 2,000 6,500 Selling and administrative expenses…
Can someone help me fill this out?
Can someone help me figure this out?
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 $75,000, the accumulated depreciation is $30,000, 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 $141,600. 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: Current Proposed Operations Operations Sales $237,800 $237,800 Direct materials $81,000 $81,000 Direct labor 56,300 18,800 Power and maintenance 5,300 9,000 Taxes, insurance, etc. 1,900 6,200 Selling and administrative expenses 56,300 56,300 Total expenses $200,800 $171,300 a. Prepare a differential analysis report…
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…
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 $62,800, the accumulated depreciation is $25,100, 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 $118,600. 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: Current Operations Operations Proposed Sales Direct materials Direct labor Power and maintenance $199,100 $199,100 $67,800 $67,800 47,100 15,700 4,400 7,500 Taxes, insurance, etc. 1,600 5,200 Selling and administrative expenses 47,100 47,100 Total expenses $168,000 $143,300 a. Prepare a differential analysis report…
Subject: acounting
im Kwon Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $75,200, the accumulated depreciation is $30,100, 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 $156,400. 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 $238,400 $238,400 Direct materials $81,200 $81,200 Direct labor 56,400 — Power and maintenance 5,300 27,800 Taxes, insurance, etc. 1,900 6,200 Selling and administrative expenses 56,400 56,400 Total expenses $201,200…