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A company is considering replacing an old piece of machinery, which cost $598,100 and has $350,000 of accumulated depreciation to date, with a new machine
A company is considering replacing an old piece of machinery, which cost $598,100 and has $350,000 of accumulated depreciation to date, with a new machine that has a purchase price of $484,000. The old machine could be sold for $61,000. The annual variable production costs associated with the old machine are estimated to be $155,500 per year for 8 years. The annual variable production costs for the new machine are estimated to be $98,800 per year for 8 years. a.1 Prepare a differential analysis dated December 10 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Costs: Differential Analysis Continue with (Alt. 1) or Replace (Alt. 2) Old Machine December 10 Line Item Description Revenues: Proceeds from sale of old machine Purchase price Variable productions costs (8 years) Profit (loss) Feedback Continue with Old Machine (Alternative 1) Replace the old machine Replace Old Machine (Alternative 2) Check My Work For the continue and replace alternatives subtract the costs from the revenues. Multiply the variable production costs for the eight year life. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2. Differential Effects (Alternative 2) a.2 Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. A cempony is corsusering replacing an oid piece of machirery, which cost $598,100 and N$5350,000 of accum dated deprecitsen to date, with a new mochine that has a purchase price of production sects for the new mochine are sitimatod to be $98,690 per year for B yesf.. a.1 Prepare a dimerzitar analpsis dated December 10 to detemirine whether to continue with (Alarnatve 1) or mplace (Aternative 2) the old machine: If an ambunt is rero, enter "O" ar requered, use a mirus sign to indicate a loss
A company is considering replacing an old piece of machinery, which cost $598,100 and has $350,000 of accumulated depreciation to date, with a new machine that has a purchase price of $484,000. The old machine could be sold for $61,000. The annual variable production costs associated with the old machine are estimated to be $155,500 per year for 8 years. The annual variable production costs for the new machine are estimated to be $98,800 per year for 8 years. a.1 Prepare a differential analysis dated December 10 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Costs: Differential Analysis Continue with (Alt. 1) or Replace (Alt. 2) Old Machine December 10 Line Item Description Revenues: Proceeds from sale of old machine Purchase price Variable productions costs (8 years) Profit (loss) Feedback Continue with Old Machine (Alternative 1) Replace the old machine Replace Old Machine (Alternative 2) Check My Work For the continue and replace alternatives subtract the costs from the revenues. Multiply the variable production costs for the eight year life. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2. Differential Effects (Alternative 2) a.2 Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine.
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