Differential Analysis Report for Machine Replacement White Noise Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $68,100, the accumulated depreciation is $27,200, its remaining useful life is five years, and its residual value is zero. A proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $128,200. 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 current and proposed operations: Current Operations Proposed Operations Sales $215,900 $215,900 Direct materials $73,500 $73,500 Direct labor 51,100 17,000 Power and maintenance 4,800 8,200 Taxes, insurance, etc. 1,700 5,700 Selling and administrative expenses 51,100 51,100 Total expenses $182,200 $155,500

a. Prepare a differential analysis report for the proposal to replace the machine. Include in the analysis both the net differential change in costs anticipated over the five years and the net annual differential change in costs anticipated. WHITE NOISE TECHNOLOGIES INC. Replace Machine Differential Analysis Report Annual costs and expensespresent machine $fill in the blank cb33b6fe6fd4f8f_1 Annual costs and expensesnew machine fill in the blank cb33b6fe6fd4f8f_2 Annual differential decrease in costs and expenses $Annual differential decrease in costs and expenses Number of years applicable fill in the blank cb33b6fe6fd4f8f_5 Total differential decrease in costs and expenses $Total differential decrease in costs and expenses Cost of new machine fill in the blank cb33b6fe6fd4f8f_8 Net differential decrease in costs and expenses, five-year total $Net differential decrease in costs and expenses, five-year total Annual net differential decrease in costs and expensesnew machine $fill in the blank cb33b6fe6fd4f8f_11