a. Prepare a differential analysis dated May 4 to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss.

Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 4

	Continue with Old Machine (Alternative 1)	Replace Old Machine (Alternative 2)	Differential Effects (Alternative 2)
Revenues:	blank	blank	blank
Sales (5 years)	$fill in the blank cf2c07feffa8062_1	$fill in the blank cf2c07feffa8062_2	$fill in the blank cf2c07feffa8062_3
Costs:
Purchase price	fill in the blank cf2c07feffa8062_4	fill in the blank cf2c07feffa8062_5	fill in the blank cf2c07feffa8062_6
Direct materials (5 years)	fill in the blank cf2c07feffa8062_7	fill in the blank cf2c07feffa8062_8	fill in the blank cf2c07feffa8062_9
Direct labor (5 years)	fill in the blank cf2c07feffa8062_10	fill in the blank cf2c07feffa8062_11	fill in the blank cf2c07feffa8062_12
Power and maintenance (5 years)	fill in the blank cf2c07feffa8062_13	fill in the blank cf2c07feffa8062_14	fill in the blank cf2c07feffa8062_15
Taxes, insurance, etc. (5 years)	fill in the blank cf2c07feffa8062_16	fill in the blank cf2c07feffa8062_17	fill in the blank cf2c07feffa8062_18
Selling and admin. expenses (5 years)	fill in the blank cf2c07feffa8062_19	fill in the blank cf2c07feffa8062_20	fill in the blank cf2c07feffa8062_21
Profit (Loss)	$fill in the blank cf2c07feffa8062_22	$fill in the blank cf2c07feffa8062_23	$fill in the blank cf2c07feffa8062_24

Question Content Area

b. Based only on the data presented, should the proposal be accepted?

Should be acceptedShould not be accepted

c. Differences in capacity between the two alternatives is

relevantnot relevant

to consider before a final decision is made.