Flint Tooling Company is considering replacing a machine that has been used in its factory for two 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:

1. Prepare a differential analysis as of November 8, 2014, comparing operations using the present machine (Alternative 1) with operations using the new machine (Alternative 2). The analysis should indicate the differential income that would result over the six-year period if the new machine is acquired. If an amount is zero, enter zero "0".

2. What other factors should be considered before a final decision is reached?

Are there any improvements in the quality of work turned out by the new machine?

What opportunities are available for the use of the funds required to purchase the new machine?

Are there any improvements in the quality of work turned out by the new machine and what opportunities are available for the use of the funds required to purchase the new machine?

What affect would this decision have on employee morale?

None of these choices is correct.

Differential Analysis for Machine Replacement Proposal Flint Tooling Company is considering replacing a machine that has been used in its factory for two years. Relevant data associated with the operations ofthe old machine and the new machine, neither of which has any estimated residual value, are as follows: Old Machine $38,000 Cost of machine, eight-year life Annual depreciation (straight-line) 4,750 Annual manufacturing costs, excluding depreciation 12,400 Annual nonmanufacturing operating expenses 2,700 Annual revenue 32,400 Current estimated selling price of the machine 12,900 New Machine Cost of machine, six-year life 7,000 Annual depreciation (straight-line) 9,500 Estimated annual manufacturing costs, exclusive ofdepreciation 3,400 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase ofthe new machine. Required: Hide Hint(s) 1. Prepare a differential analysis as of November 8, 2014, comparing operations using the present machine (Alternative 1)with operations using the new machine (Alternative 2). The analysis should indicate the differential income that would result er the six-year period if the new machine is acquired. lf an amount is zero, enter ze "0 ro Differential Analysis Continue witholdMachine (Alt. 1) or Replace oldMachine (Alt.2) November 8, 2014 Continue with old Machine (Alternative 1 Replace Old Machine (Alternative 2) Differential Effect on Income (Alternative 2 Revenues Proceeds from sale of old machine Costs: Purchase price Annual manufacturing costs (6 yrs.) s 9900. Income (Loss)