1.) A machine purchased three years ago for $311,000 has a current book value using straight-line depreciation of $187,000; its operating expenses are $36,000 per year. A replacement machine would cost $228,000, have a useful life of eleven years, and would require $13,000 per year in operating expenses. It has an expected salvage value of $74,000 after eleven years. The current disposal value of the old machine is $87,000; if it is kept 11 more years, its residual value would be $15,000. Required Calculate the total costs in keeping the old machine and purchase a new machine. Should the old machine be replaced?

2.)

\begin{tabular}{|l|c|c|} \hline & KeepOldMachine & PurchaseNewMachine \\ \hline Total costs & \\ \hline \multicolumn{2}{|l|}{ Should the old machine be replaced? } & Yes \\ \hline \end{tabular} Franklin Corporation makes and sells state-of-the-art electronics products. One of its segments produces The Math Machine, an inexpensive calculator. The company's chief accountant recently prepared the following income statement showing annual revenues and expenses associated with the segment's operating activities. The relevant range for the production and sale of the calculators is between 35,000 and 71,000 units per year. Required a. A large discount store has approached the owner of Franklin about buying 7,000 calculators. It would replace The Math Machine's label with its own logo to avoid affecting Franklin's existing customers. Because the offer was made directly to the owner, no sales commissions on the transaction would be involved, but the discount store is willing to pay only $5.50 per calculator. Calculate the contribution margin from the special order. Based on quantitative factors alone, should Franklin accept the special order? A large discount store has approached the owner of Franklin about buying 7,000 calculators. It would replace The Math Machine's label with its own logo to avoid affecting Franklin's existing customers. Because the offer was made directly to the owner, no sales commissions on the transaction would be involved, but the discount store is willing to pay only $5.50 per calculator. Calculate the contribution margin from the special order. Based on quantitative factors alone, should Franklin accept the special order? (Negative amounts should be indicated by a minus sign.)