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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

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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 Diane Buswell, controller, that the company should consider replacing the current rotomold oven as a way to realize savings from reduced energy consumption. The oven operates on natural gas, using 20,700 therms of natural gas for an entire year. A new, energy efficient rotomold oven would operate on 18,300 therms of natural gas for an entire year. After seeking out price quotes from a few suppliers, Diane determined that it would cost approximately $305,000 to purchase a new, energy-efficient rotomold 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 today for $12,200 Otherwise, its remaining useful life is estimated at 10 years with a zero salvage value. (a) Prepare an incremental analysis to determine if Current Designs should purchase the new rotomoldoven, assuming that the average price for natural gas over the next 10 years will be $0.55 pertherm. (Enter decrease in net income then enter with a negotive stan preceding the number or parenthesis, as -15.000 or (15,0001) Retain Oven Replace Oven Net Income Increase (Decrease) Variable manufacturing costs S Newoven cost Proceeds from scrapping old oven Total

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