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Current Designs faces a number of important decisions that require incremental analysis. Current Designs is always working to identify ways to increase efficiency while becoming
Current Designs faces a number of important decisions that require incremental analysis. Current Designs is always working to identify ways to increase efficiency while becoming more environmentally conscious. During a recent brainstorming session, one employee suggested to Laura Allen, controller, that the company should consider replacing the current rotomould oven as a way to realize savings from reduced energy consumption. The oven operates on natural gas, using 17,300 therms of natural gas for an entire year. A new, energy-efficient rotomould oven would operate on 15,300 therms of natural gas for an entire year. After seeking out price quotes from a few suppliers, Laura determined that it would cost approximately $255,000 to purchase a new, energy-efficient rotomould oven. She determines that the expected useful life of the new oven would be 10 years, and it would have no salvage value at the end of its useful life. Current Designs would be able to sell the current oven for $10,200. Laura is concerned that natural gas prices might increase at a faster rate over the next 10 years. If the company projects that the average natural gas price of the next 10 years could be as high as $0.75 per therm, determine how that might change your conclusion in part (a). (If an amount reduces the net income then enter with a negative sign preceding the number or parenthesis, e.g. 15,000,(15,000). Current Designs purchase the new rotomould oven
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