Boyer Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $55,400, the accumulated depreciation is $22,200, its remaining useful life is five years, and its residual value is negligible. On May 4 of the current year, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $115,200. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on present and proposed operations:

	Present Operations		Proposed Operations
Sales	$175,600		$175,600
Direct materials	$59,800		$59,800
Direct labor	41,600
Power and maintenance	3,900		20,500
Taxes, insurance, etc.	1,400		4,600
Selling and administrative expenses	41,600		41,600
Total expenses	$148,300		$126,500

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:
Sales (5 years)	$fill in the blank f7a97afedf95fea_1	$fill in the blank f7a97afedf95fea_2	$fill in the blank f7a97afedf95fea_3
Costs:
Purchase price	fill in the blank f7a97afedf95fea_4	fill in the blank f7a97afedf95fea_5	fill in the blank f7a97afedf95fea_6
Direct materials (5 years)	fill in the blank f7a97afedf95fea_7	fill in the blank f7a97afedf95fea_8	fill in the blank f7a97afedf95fea_9
Direct labor (5 years)	fill in the blank f7a97afedf95fea_10	fill in the blank f7a97afedf95fea_11	fill in the blank f7a97afedf95fea_12
Power and maintenance (5 years)	fill in the blank f7a97afedf95fea_13	fill in the blank f7a97afedf95fea_14	fill in the blank f7a97afedf95fea_15
Taxes, insurance, etc. (5 years)	fill in the blank f7a97afedf95fea_16	fill in the blank f7a97afedf95fea_17	fill in the blank f7a97afedf95fea_18
Selling and admin. expenses (5 years)	fill in the blank f7a97afedf95fea_19	fill in the blank f7a97afedf95fea_20	fill in the blank f7a97afedf95fea_21
Profit (Loss)	$fill in the blank f7a97afedf95fea_22	$fill in the blank f7a97afedf95fea_23	$fill in the blank f7a97afedf95fea_24

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

c. Differences in capacity between the two alternatives is to consider before a final decision is made.