Differential Analysis for Machine Replacement

annual data on present and proposed operations:

Differential Analysis

Continue with $($Alt$.1)$ or Replace $($Alt$.2)$ Old Machine

October $1$

Revenues:

Sales $(5$ years$)$

Costs:

Purchase price

Direct materials $(5$ years$)$

Direct labor $(5$ years$)$

Power and maintenance $(5$ years$)$

Taxes, insurance, etc. $(5$ years$)$

Selling and admin. expenses $(5$ years$)$

Profit $($loss$)$

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

:

c$.$ Differences in capacity between the two alternatives is

it to consider before a final decision is made.