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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)

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)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Purchase price Direct 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 with Old Machine (Alternative 1) Q▬▬▬▬ Replace Old Machine Differential Effects (Alternative 2) (Alternative 2) Q☐☐☐☐☐ ▬▬▬▬▬▬
Transcribed Image Text: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 Purchase price Direct 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 with Old Machine (Alternative 1) Q▬▬▬▬ Replace Old Machine Differential Effects (Alternative 2) (Alternative 2) Q☐☐☐☐☐ ▬▬▬▬▬▬
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 $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 proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $143,900. 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 $219,400 $219,400 $74,700 $74,700 51,900 4,800 1,700 51,900 25,600 5,700 51,900 $185,000 $157,900
Transcribed Image Text: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 $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 proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $143,900. 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 $219,400 $219,400 $74,700 $74,700 51,900 4,800 1,700 51,900 25,600 5,700 51,900 $185,000 $157,900
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