Hi please give me instruction on this question cant figure out.. Differential Analysis for Machine Replacement Taipei Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $77,400, the accumulated depreciation is $31,000, its remaining useful life is five years, and its residual value is negligible. On September 27, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $161,000. 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 present and proposed operations: Present Operations Proposed Operations Sales $245,400 $245,400 Direct materials 83,600 83,600 Direct labor 58,100 — Power and maintenance 5,400 28,600 Taxes, insurance, etc. 1,900 6,400 Selling and administrative expenses 58,100 58,100 Total expenses $207,100 $176,700 a. Prepare a differential analysis dated September 27, to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter zero "0". Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) September 27 Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) Differential Effect on Income (Alternative 2) Revenues: Sales (5 years) $ $ $ Costs: Purchase price Direct materials (5 years) Direct labor (5 years) Power and maintenance (5 years) Taxes, insurance, etc. (5 years) Selling and admin. expenses (5 years) Income (Loss) $ $ $ b. Based only on the data presented, should the proposal be accepted? c. Differences in capacity between the two alternatives is to consider before a final decision is made.

Hi please give me instruction on this question cant figure out.. Differential Analysis for Machine Replacement Taipei Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $77,400, the accumulated depreciation is $31,000, its remaining useful life is five years, and its residual value is negligible. On September 27, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $161,000. 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 present and proposed operations: Present Operations Proposed Operations Sales $245,400 $245,400 Direct materials 83,600 83,600 Direct labor 58,100 — Power and maintenance 5,400 28,600 Taxes, insurance, etc. 1,900 6,400 Selling and administrative expenses 58,100 58,100 Total expenses $207,100 $176,700 a. Prepare a differential analysis dated September 27, to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter zero "0". Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) September 27 Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) Differential Effect on Income (Alternative 2) Revenues: Sales (5 years) $ $ $ Costs: Purchase price Direct materials (5 years) Direct labor (5 years) Power and maintenance (5 years) Taxes, insurance, etc. (5 years) Selling and admin. expenses (5 years) Income (Loss) $ $ $ b. Based only on the data presented, should the proposal be accepted? c. Differences in capacity between the two alternatives is to consider before a final decision is made.

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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Hi please give me instruction on this question cant figure out..

Differential Analysis for Machine Replacement

Taipei Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $77,400, the accumulated depreciation is $31,000, its remaining useful life is five years, and its residual value is negligible. On September 27, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $161,000. 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 present and proposed operations:

	Present Operations	Proposed Operations
Sales	$245,400	$245,400
Direct materials	83,600	83,600
Direct labor	58,100	—
Power and maintenance	5,400	28,600
Taxes, insurance, etc.	1,900	6,400
Selling and administrative expenses	58,100	58,100
Total expenses	$207,100	$176,700

a. Prepare a differential analysis dated September 27, to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter zero "0".

Differential Analysis
Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)
September 27
	Continue with Old Machine (Alternative 1)	Replace Old Machine (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues:
Sales (5 years)	$	$	$
Costs:
Purchase price
Direct materials (5 years)
Direct labor (5 years)
Power and maintenance (5 years)
Taxes, insurance, etc. (5 years)
Selling and admin. expenses (5 years)
Income (Loss)	$	$	$

b. Based only on the data presented, should the proposal be accepted?

c. Differences in capacity between the two alternatives is to consider before a final decision is made.

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