A new $140,000 machine is expected to have a 5-year life and a terminal value of zero. It can produce 40,000 units a year at a variable cost of $6 per unit. The variable cost is $7.00 per unit with an old machine, which has a book value of $70,000. It is being depreciated on a straight-line basis at $14,000 per year. It too is expected to have a terminal value of zero. Its current disposal value is also zero because it is highly specialized equipment. The salesperson of the new machine prepared the following comparison: (Click the icon to view the comparison.) He said, "The new machine is obviously a worthwhile acquisition. You will save $0.65 for every unit you produce." Read the requirements. wascs wlaI anu un I UUSID UIT an annual vuruITIC UI TU,uuu uns, WHICH May TIL WC aucui alc. If you do not agree with the salesperson's analysis, how would you change it? A. A correct analysis would utilize an expected volume (versus the new machine's capacity) and exclude the depreciation on the old machine. OB. A correct analysis would exclude variable costs and include the book value of the old machine. OC. A correct analysis would exclude depreciation on the both the new machine and the old machine. OD. Not applicable. The salesperson's analysis is accurate. Requirement 2. Prepare an analysis of total and unit differential costs if the annual volume is 20,000 units. (Leave unused cells blank. Enter unit costs to the nearest cent.) New Machine Old Machine Total cost Unit cost i Data Table New Machine Old Machine Units 40,000 40,000 Variable costs $ 240,000 $ 280,000 14,000 28,000 Straight-line depreciation $ 268,000 $ 294,000 Total cost $ 6.70 $ 7.35 Unit cost