Differential Analysis for Machine Replacement Proposal Flint Tooling Company is considering replacing a machine that has been used in its factory for four years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows: Old Machine $107,700 10,770 38,200 Cost of machine, ten-year life Annual depreciation (straight-line) Annual manufacturing costs, excluding depreciation Annual nonmanufacturing operating expenses Annual revenue Current estimated selling price of the machine 12,700 94,700 36,800 New Machine Cost of machine, six-year life $139,200 Annual depreciation (straight-line) 23,200 Estimated annual manufacturing costs, exclusive of depreciation 19,200 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Required: 1. Prepare a differential analysis as of November 8 comparing operations using the present machine (Alternative with operations using the new machine (Alternative 2). The analysis should indicate the differential profit that would result over the six- year period if the new machine is acquired. 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) November 8 Continue with Replace Differential Old Machine Old Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) 38,200 12,700 Annual manufacturing costs, excluding depreciation Annual nonmanufacturing operating expenses Annual revenue Current estimated selling price of the machine 94,700 36,800 New Machine Cost of machine, six-year life $139,200 Annual depreciation (straight-line) 23,200 Estimated annual manufacturing costs, exclusive of depreciation 19,200 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Required: 1. Prepare a differential analysis as of November 8 comparing operations using the present machine (Alternative 1) with operations using the new machine (Alternative 2). The analysis should indicate the differential profit that would result over the six- year period if the new machine is acquired. 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) November 8 Continue with Replace Differential Old Machine Old Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Proceeds from sale of old machine Costs Purchase price Annual manufacturing costs (6 yrs.) Profit (loss)