Subject: acounting 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 analysisover 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 1Purchase priceDirect materis (5 years)Direct labor (5 years)Power and maintenance (5 years)Taxes, insurance, etc. (5 years)Selling and admin. expenses (5 years)Profit (loss)Continue withOld Machine(Alternative 1)Q▬▬▬▬Replace Old Machine Differential Effects(Alternative 2)(Alternative 2)Q☐☐☐☐☐▬▬▬▬▬▬ 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 the machineis $69,200, the accumulated depreciation is $27,700, its remaining useful life is 5 years, and its residual value is negligible. On October 1 of the current year, a proposalwas made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $143,900. The automatic machine has anestimated useful life of 5 years and no significant residual value. For use in evaluating the proposal, the managerial accountant accumulated the following annual data onpresent and proposed operations:SalesDirect materialsDirect laborPower and maintenanceTaxes, insurance, etc.Selling and administrative expensesTotal expensesPresent ProposedOperations Operations$219,400$219,400$74,700$74,70051,9004,8001,70051,90025,6005,70051,900$185,000 $157,900

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

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 materis (5 years) Direct labor (5 years) Power and maintenance (5 years) 000000 Replace Old Machine (Alternative 2) 000000 Differential Effects (Alternative 2)