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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.

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.

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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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 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 0....18.28 jpe 1000_F_265- 3_EDG5...PQ beg
Transcribed Image Text: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 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 0....18.28 jpe 1000_F_265- 3_EDG5...PQ beg
Power and maintenance 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 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 Annual differential decrease in costs and expenses Number of years applicable Total differential decrease in costs and expenses Cost of new machine Net differential decrease in costs and expenses, five-year total Annual net differential decrease in costs and expenses-new machine Feedback reen Sha 0....18.28 jpe 1000_F_265 3_EDG5...PQ peg
Transcribed Image Text:Power and maintenance 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 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 Annual differential decrease in costs and expenses Number of years applicable Total differential decrease in costs and expenses Cost of new machine Net differential decrease in costs and expenses, five-year total Annual net differential decrease in costs and expenses-new machine Feedback reen Sha 0....18.28 jpe 1000_F_265 3_EDG5...PQ peg
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