1. differential analysis for a lease or sell decision

2. differential analysis for a discontinued product

3. make or buy decision

4. Machine replacement decision

5. sell or process further

Differential Analysis for a Lease-or-Sell Decision Inman Construction Company is considering selling excess machinery with a book value of $278,600 (original cost of $399,400 less accumulated depreciation of $120,800) for $274,600, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $283,300 for five years, after which it is expected to have no residual value. During the penod of the lease, Inman Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $25,200. a. Prepare a differential analysis, dated May 25 to determine whether Inman should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Lease Machinery Sell Machinery Differential Effect (Alternative 1) (Alternative 2) on Income (Alternative 2) Revenues Costs Income (Loss) b. On the basis of the data presented, would it be advisable to lease or sell the machinery Explain The net from selling is S Differential Analysis for a Discontinued Product A condensed income statement by product line for British Beverage Inc. indicated the following for King Cola for the past year: Sales $234,800 Cost of goods sold 110,000 Gross profit $124,800 Operating expenses 142,000 Loss from operations $(17,200) It is estimated that 13% of the cost of goods sold represents fixed factory overhead costs and that 19% of the operating expenses are fixed. Since King Cole is only one of many products, the fixed costs will not be materially affected if the product is discontinued. a. Prepare a differential analysis, dated March 3, to determine whether King Cola should be continued (Alternative 1) or discontinued (Alternative 2) If an amount is zero, enter zero "0". Use a minus sign to indicate a loss. Differential Analysis Continue King Cola (Alt. 1) or Discontinue King Cola (Alt. 2) January 21 Continue King Discontinue King Differential Effect on Income Cola (Alternative 1) Cola (Alternative 2) (Alternative 2) Revenues Costs Variable cost of goods sold Variable operating expenses Income (Loss) Com o Computer Company has been purchasing carrying cases for its portable computers at a purchase price of $60 per unit. The company, which is currently operating full capaty, charges factory overhead to production at the rate of 40% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be follows: 7.2 Direct materials $26 Direct labor 18 Factory overhead (40% of direct labor) Total cost per unit $51.2 If Companion Computer Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 15% of the direct labor costs. a. Prepare a differential analysis dated February 24 to determine whether the company should make (Alternative 1) or buy (Alternative 2) the carrying case. If required, round your answers to two decimal places. If an amount is zero, enter "o". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Make Carrying Case (Alt. 1) or Buy Carrying Case (Alt. 2) February 24 Make Carrying Buy Carrying Differential Effect Case (Alternative 1) Case (Alternative 2) on Income (Alternative 2) Sales Price Costs: Purchase price Direct matenals per unit Direct labor per unit Variable factory overhead per unit Fixed factory overhead per unit Income (LOSS A company is considering replacing an old piece of machinery, which cost $600,100 and has $349,700 of accumulated depreciation to date, with a new machine that has a purchase price of $486,400. The old machine could be sold for $64,700. The annual variable production costs associated with the old machine are estimated to be $155,600 per year for eight years. The annual variable production costs for the new machine are estimated to be $101,300 per year for eight years. a. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "o". 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) Apnl 29 Continue Replace Differential with Old Old Effect Machine Machine on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine su Casts: Purchase price Variable productions costs (8 years) Income (Loss Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. b. What is the sunk cost in this situation? The sunk cost is s Sell or Process Further Bunyon Lumber Company incurs a cost of $378 per hundred board feet (hbf) in processing certain "rough-cut" lumber, which it sells for $546 per hbf. An alternative is to produce "finished cut" at a total processing cost of $527 per hbf, which can be sold for $768 per hbf. Prepare a differential analysis dated August 9 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Rough-Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2) August 9 Sell Process Differential Further into Rough-Cut Effect Finished Cut (Alternative 1) on Income (Alternative 2) (Alternative 2) Revenues, per 100 board ft. Costs, per 100 board ft. Income (Loss), per 100 board ft. S Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2)