Differential Analysis for Machine Replacement ProposalFranklin Printing Company is considering replacing a machine that has been used in its factory for 4 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:Old MachineCost of machine, 10-year lifeAnnual depreciation (straight-line)Annual manufacturing costs, excluding depreciationAnnual nonmanufacturing operating expensesAnnual revenueCurrent estimated selling price of the machineNew Machine$109,30010,93038,00011,30095,80036,600Cost of machine, 6-year lifeAnnual depreciation (straight-line)$135,60022,60017,500Estimated annual manufacturing costs, exclusive of depreciationAnnual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.Required: 1. Prepare a differential analysis as of November 8 comparing operations using the present machine (Alternative 1) with operations using the new machine (Alternative 2). The analysis should indicate the differential profit that would result over the 6-year period if the new machineis acquired. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss.Differential AnalysisContinue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)November 8CostsLine Item DescriptionRevenuesProceeds from sale of old machinePurchase priceAnnual manufacturing costs (6 yrs.)Profit (loss)Continue with OldMachine (Alternative 1)Replace Old Machine Differential Effects(Alternative 2)(Alternative 2)2. What other factors should be considered before a final decision is reached?a. Are there any improvements in the quality of work turned out by the new machine?b. What opportunities are available for the use of the funds required to purchase the new machine?c. Are there any improvements in the quality of work turned out by the new machine and what opportunities are available for the use of the funds required to purchase the new machine?d. What affect would this decision have on employee morale?e. None of these choices are correct.

Differential Analysis for Machine Replacement Proposal Franklin Printing Company is considering replacing a machine that has been used in its factory for 4 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: Old Machine Cost of machine, 10-year life. Annual depreciation (straight-line). Annual manufacturing costs, excluding depreciation Annual nonmanufacturing operating expenses Annual revenue Current estimated selling price of the machine New Machine $109,300 10,930 38,000 11,300 95,800 36,600 Cost of machine, 6-year life $135,600 22,600 Annual depreciation (straight-line). Estimated annual manufacturing costs, exclusive of depreciation 17,500 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.. Required:

Differential Analysis for Machine Replacement Proposal Franklin Printing Company is considering replacing a machine that has been used in its factory for 4 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: Old Machine Cost of machine, 10-year life. Annual depreciation (straight-line). Annual manufacturing costs, excluding depreciation Annual nonmanufacturing operating expenses Annual revenue Current estimated selling price of the machine New Machine $109,300 10,930 38,000 11,300 95,800 36,600 Cost of machine, 6-year life $135,600 22,600 Annual depreciation (straight-line). Estimated annual manufacturing costs, exclusive of depreciation 17,500 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.. Required:

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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Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $601,100 and has $350,100 of accumulated depreciation to date, with a new machine that has a purchase price of $485,500. The old machine could be sold for $62,100. The annual variable production costs associated with the old machine are estimated to be $155,900 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,300 per year for eight years. a.1 Prepare a differential analysis dated September 13, to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) September 13 Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) Differential Effect on…
Differential Analysis for Machine Replacement Proposal Franklin Printing Company is considering replacing a machine that has been used in its factory for four 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: Old Machine Cost of machine, ten-year life $110,000 Annual depreciation (straight-line) 11,000 Annual manufacturing costs, excluding depreciation 39,100 Annual nonmanufacturing operating expenses 11,300 Annual revenue 94,600 Current estimated selling price of the machine 35,900 New Machine Cost of machine, six-year life $138,000 Annual depreciation (straight-line) 23,000 Estimated annual manufacturing costs, exclusive of depreciation 17,700 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Required: 1. Prepare a differential analysis as of November 8 comparing…
Depreciation Methods A company wants to buy a new refrigerated truck for $5,000,000. The truck can be used for 4 years, then it has a market value of $360,000. You are asked to calculate the depreciation for each year for each of the four classic depreciation methods: a) straight line b) Declining balance of 150% c) Units of production method (given: use in year 1: 450,000 km, year 2: 410,000 km, year 3: 380,000 km, year 4: 330,000 km) Please solve in Excel and show the formulas. Please answer fast i give upvote.
Differential Analysis for Machine Replacement Proposal Flint 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: Old Machine Cost of machine, eight-year life $38,000 Annual depreciation (straight-line) 4,750 Annual manufacturing costs, excluding depreciation 12,400 Annual nonmanufacturing operating expenses 2,700 Annual revenue 32,400 Current estimated selling price of the machine 12,900 New Machine Cost of machine, six-year life $57,000 Annual depreciation (straight-line) 9,500 Estimated annual manufacturing costs, exclusive of depreciation 3,400 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Required: 1. Prepare a differential analysis as of November 8 comparing operations…
Show Attempt History Current Attempt in Progress Wildhorse Co. purchased equipment on March 31, 2021, at a cost of $264,000. Management is considering the merits of using the diminishing-balance or units-of-production method of depreciation instead of the straight-line method, which it currently uses for other equipment. The new equipment has an estimated residual value of $8,000 and an estimated useful life of either four years or 80,000 units. Demand for the products produced by the equipment is sporadic so the equipment will be used more in some years than in others. Assume the equipment produces the following number of units each year: 14,600 units in 2021; 20,600 units in 2022; 19,800 units in 2023; 20,000 units in 2024; and 5,000 units in 2025. Wildhorse has a December 31 year end. 6 (a) - Your answer is partially correct. Prepare separate depreciation schedules for the life of the equipment using: (Round depreciation per unit to 2 decimal places, e.g. 5.28 and final answers to O…
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Replacement Analysis The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $80,000. It had an expected life of 10 years when it was bought and its remaining depreciation is $8,000 per year for each year of its remaining life. As older flange-lippers are robust and useful machines, this one can be sold for $20,000 at the end of its useful life. A new high-efficiency digital-controlled flange-lipper can be purchased for $150,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $50,000 per year, although it will not affect sales. At the end of its useful life, the high-efficiency machine is estimated to be worthless. MACRS depreciation will be used, and the machine will be depreciated over its 3-year class life rather than its 5-year economic life, so the applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. The old machine can be sold today for $55,000. The firm's tax rate is 35%, and the…
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Differential Analysis for Machine Replacement Proposal Flint Tooling Company is considering replacing a machine that has been used in its factory for four 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: Old Machine Cost of machine, 10-year life $106,700 Annual depreciation (straight-line) 10,670 Annual manufacturing costs, excluding depreciation 39,100 Annual nonmanufacturing operating expenses 12,900 Annual revenue 94,300 Current estimated selling price of the machine 36,700 New Machine Cost of machine, six-year life $138,000 Annual depreciation (straight-line) 23,000 Estimated annual manufacturing costs, exclusive of depreciation 18,900 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Required: 1. Prepare a differential analysis as of November 8 comparing operations…
ex2. Differential Analysis for Machine Replacement Proposal Flint 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: Old Machine Cost of machine, eight-year life $38,000 Annual depreciation (straight-line) 4,750 Annual manufacturing costs, excluding depreciation 12,400 Annual nonmanufacturing operating expenses 2,700 Annual revenue 32,400 Current estimated selling price of the machine 12,900 New Machine Cost of machine, six-year life $57,000 Annual depreciation (straight-line) 9,500 Estimated annual manufacturing costs, exclusive of depreciation 3,400 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Required: 1. Prepare a differential analysis as of November 8 comparing…
Replacement Analysis The Everly Equipment Company's flange-lipping machine was purchased 5 years ago for $100,000. It had an expected life of 10 years when it was bought and its remaining depreciation is $10,000 per year for each year of its remaining life. As older flange-lippers are robust and useful machines, this one can be sold for $20,000 at the end of its useful life. A new high-efficiency digital-controlled flange-lipper can be purchased for $140,000, including installation costs. During its 5-year life, it will reduce cash operating expenses by $55,000 per year, although it will not affect sales. At the end of its useful life, the high-efficiency machine is estimated to be worthless. MACRS depreciation will be used, and the machine will be depreciated over its 3-year class life rather than its 5-year economic life, so the applicable depreciation rates are 33.33%, 44.45%, 14.81%, and 7.41%. The old machine can be sold today for $50,000. The firm's tax rate is 35%, and the…
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