es EX 25-1 Differential analysis for a lease or sell decision Steady Construction Company is considering selling excess machinery with a book value of $280,000 (original cost of $400,000 less accumulated depreciation of $120,000) TOT $244,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $255,000 for five years, after which it is expected to have no residual value. During the period of the lease, Steady Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $23,800. a. Prepare a differential analysis, dated April 16, 2014, to determine whether Steady should lease (Alternative 1) or sell (Alternative 2) the machinery. b. On the basis of the data presented, would it be advisable to lease or sell the machinery? Explain. EX 25-2 Differential analysis for a lease or buy decision OBJ. 1 ution is considering new equipment. The equipment can be purchased from Chapter 25 Differential Analysis, Product Pricing, and Activity merential Analysis, Product Pricing, and Activity-Based Costing 1183 EX 25-6 Decision to discontinue a product OBJ. 1 On the basis of the following data, the general manager of Feather wing data, the general manager of Featherweight Shoes Inc. decided to discontinue Children's Shoes because it reduced income from operam $17,000. What is the flaw in this decision if it is assumed fixed costs would not be ma- terially affected by the discontinuance? Women's Shoes $500,000 Total $1,035,000 Featherweight Shoes Inc. Product Line Income Statement For the Year Ended April 30, 2014 Children's Shoes Men's Shoes Sales $ 235,000 $300,000 Costs of goods sold: Variable costs $130,000 $150,000 Fixed costs 41,000 60,000 Total cost of goods sold $171,000 $210,000 Gross profit $ 64,000 $ 90,000 Selling and adminstrative expenses: Variable selling and admin. expenses $ 46,000 $ 45,000 Fixed selling and admin. expenses 35,000 20,000 Total selling and admin. expenses $ 81,000 $ 65,000 Income (loss) from operations $(17,000) $ 25,000 $220,000 120,000 $340,000 $160,000 $ 500,000 221,000 $ 721,000 $ 314,000 $ 95,000 25,000 $120,000 $ 40,000 $ 186,000 80,000 $ 266,000 $ 48,000