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Differential Analysis for Machine Replacement Proposal Franklin Printing Company is considering replacing a machine that has been used in its factory for four years.
Differential Analysis for Machine Replacement Proposal Franklin Printing 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 Cost of machine, ten-year life $106,900 Annual depreciation (straight-line) 10,690 Annual manufacturing costs, excluding depreciation 37,700 Annual nonmanufacturing operating expenses Annual revenue 12,700 95,600 Current estimated selling price of the machine 35,400 New Machine Cost of machine, six-year life Annual depreciation (straight-line) $137,400 Estimated annual manufacturing costs, exclusive of depreciation 22,900 18,600 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.
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