Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Textbook Question
Chapter 25, Problem 2PA
Differential analysis for machine replacement proposal
Lexigraphic 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:
Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.
Instructions
- 1. Prepare a differential analysis as of April 30 comparing operations using the present machine (Alternative 1) with operations using the new machine (Alternative 2). The analysis should indicate the total differential profit that would result over the six-year period if the new machine is acquired.
- 2. List other factors that should be considered before a final decision is reached.
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Differntial analysis for machine replacement proposal
Lexigraphic 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:
Annual nonmanfacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.
Instructions
1. Prepare a differential analysis as of april 30 comparing operations using the present machine (alternative 1 ) with operations using the new machine (alternative 2 ).The analysis should indicate the total differntial income that would result over the six-years period if the new machine is acquired.
2 List other factors that should be considered before a final decision is reached.
Differential Analysis for Machine Replacement Proposal
Lexigraphic 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, 10-year life
$89,000
Annual depreciation (straight-line)
8,900
Annual manufacturing costs, excluding depreciation
23,600
Annual nonmanufacturing operating expenses
6,100
Annual revenue
74,200
Current estimated selling price of machine
29,700
New Machine
Purchase price of machine, six-year life
$119,700
Annual depreciation (straight-line)
19,950
Estimated annual manufacturing costs, excluding depreciation
6,900
Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.
Required:
Prepare a differential…
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.
Instructions
1. Prepare a differential ananlysis as of November 8 comparing operations using…
Chapter 25 Solutions
Financial And Managerial Accounting
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