Current Attempt in Progress Carla Vista Timber Corporation uses a machine that removes the bark from cut timber. The machine is unreliable and results in a significant amount of downtime and excessive labor costs. Management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labor costs. Data are presented below for the two machines: Old Machine New Machine Original purchase cost $326,400 $355,200 Accumulated depreciation 220,800 Estimated life 5 years 5 years It is estimated that the new machine will produce annual cost savings of $81,600. The old machine can be sold to a scrap dealer for $8,000. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. Determine whether the company should purchase the new machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0 for the amounts.) Retain Replace Net Incoi Equipment Equipment Increase/(Der 2$ 2$ 2$ $4 2$ The company O purchase the new machine. %24 <> <> <> <>

Current Attempt in Progress Carla Vista Timber Corporation uses a machine that removes the bark from cut timber. The machine is unreliable and results in a significant amount of downtime and excessive labor costs. Management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labor costs. Data are presented below for the two machines: Old Machine New Machine Original purchase cost $326,400 $355,200 Accumulated depreciation 220,800 Estimated life 5 years 5 years It is estimated that the new machine will produce annual cost savings of $81,600. The old machine can be sold to a scrap dealer for $8,000. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. Determine whether the company should purchase the new machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0 for the amounts.) Retain Replace Net Incoi Equipment Equipment Increase/(Der 2$ 2$ 2$ $4 2$ The company O purchase the new machine. %24 <> <> <> <>

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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eBook Differential Analysis Report for Machine Replacement White Noise Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $57,900, the accumulated depreciation is $23,200, 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 $109,000. 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 $183,500 $183,500 Direct materials $62,500 $62,500 Direct labor 43,400 14,500 Power and maintenance 4,100 6,900 Taxes, insurance, etc. 1,400 4,800 Selling and administrative expenses 43,400 43,400 Total expenses…
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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…
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The manager of a plant that manufactures stepper drives knewthat MACRS and DDB were both accelerated depreciation methods, but out of curiosity, hewanted to know which one would provide the faster write-off in the first 3 years for equipmentthat has a first cost of $300,000, a 5-year life, and a $60,000 salvage value.(a) Use hand calculations to determine which method yields the lower book value and by howmuch.(b) Develop the complete depreciation schedules on a spreadsheet and use them to answer thequestions above.(c) Using your spreadsheet results, explain what happened to the DDB depreciation amounts foryears 4 and 5.
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