A company is considering replacing an old piece of machinery, which cost $599,900 and has $350,400 of accumulated depreciation to date, with a new machine that costs $484,500. The old equipment could be sold for $64,200. The annual variable production costs associated with the old machine are estimated to be $157,600 per year for eight years. The annual variable production costs for the new machine are estimated to be $102,500 per year for eight years.
a. Prepare a differential analysis dated October 3, 2012. If an amount is zero, enter zero "0".
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Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) | |
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| | Continue with Old Machine (Alternative 1) | | | Replace Old Machine (Alternative 2) | | | Differential Effect on Income (Alternative 2) | |
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Proceeds from sale of old machine | | | | | | | |
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Variable productions costs (8 years) | | | | | | | |
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