Differential Analysis for Machine Replacement Boyer Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine $58,900, the accumulated depreciation is $23,600, its remaining useful life is five years, and its residual value is negligible. On May 4 of the current year, a proposal w made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $122,500. 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: Proposed Operations $186,700 $63,600 Sales Direct materials Direct labor Present Operations $186,700 $63,600 44,200 4,100 1,500 44,200 $157,600 Power and maintenance Taxes, insurance, etc. Selling and administrative expenses 21,800 4,900 44,200 $134,500 Total expenses 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) Naut Book Total expenses $157,600 $134,500 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 "o". 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 Replace Differential Machine Old Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) 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 (Los) Feedback eBook Calculator Total Cost Method of Product Pricing Smart Stream Inc. uses the total cost method of applying the cost-plus approach to product pricing. The costs of producing and selling 8,000 units of cell phones are a follows: Variable costs per unit: Fixed costs: Direct materials $83 Factory overhead $331,500 Direct labor 38 Selling and administrative expenses 116,500 Factory overhead 25 Selling and administrative expenses 20 Total variable cost per unit $166 Smart Stream desires a profit equal to a 16% return on invested assets of $910,200 a. Determine the total costs and the total cost amount per unit for the production and sale of 8,000 cellular phones, Round the cost per unit to two decimal places Total cost 1,776,000 Total cost amount per un 222 b. Determine the total cost markup percentage for cellular phones, Round your answer to two decimal places c. Determine the selling price of cellular phones. Round to the nearest cent. per cellular phone
