Saginaw Tooling Company is considering replacing a machine that has been used in its factory for two

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Saginaw 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 Annual depreciation (straight-line) Annual manufacturing costs, excluding d

Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.
1. Prepare a differential analysis as of September 10, 2012, comparing operations using the present equipment (Alternative 1) with operations using the new equipment (Alternative 2). The analysis should indicate the differential income 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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Accounting

ISBN: 9780538475006

24th Edition

Authors: Carl S Warren, James M Reeve, Jonathan Duchac

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