Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi I can't figure out the cost of replacing the oldMachine and total differential decrease cost Week 3 - Assignment Keep or Replace Machine: Skiles

Hi I can't figure out the cost of replacing the oldMachine and total differential decrease cost

image text in transcribed
Week 3 - Assignment Keep or Replace Machine: Skiles Coporation is a manufacturer of classic rocking chairs. The company has been using a particular sanding and finishing machine for over 10 years and believes that it may be time to replace the machine. The company is trying to decide whether replacing the old machine is a wise economic decision. The company's controller pulled together the following information on the old machine and the new possible replacement machine. Old Machine: 0 Original cost $434,800 Current accumulated depreciation 324,600 Estimated annual variable manufacturing costs for machine 74,750 Estimated selling price of machine 155,600 Estimated remaining useful life (in years) a New Machine: Purchase cost $793,700 Estimated annual variable manufacturing costs for machine 49,300 Estimated residual vaiue 0 Estimated useful life (in years) 6 Select the relevant or irrelevant information below: Annual variable costs of old machine Relevant ' \\l Selling price of old machine Relevant v \\f Matching iives Relevant V J Purchase price of new machine Relevant ' 'l Accumulated depreciation of ofd machine Irrelevant v \\/ Fill in the differential analysis. Replace or Keep Decision Differential Analysis Report Cost of replacing old machine: Annual differential decrease in cost 3', x number of years __ 6; J Total differential decrease in cost Proceeds from sale of present machine 155,600 J $ Cost of new machine ' 793.7004 i/ Net differential (increasedecrease in cost, six year total $g Feedback ' Check My Work Multiply the annual differential decrease in costs attributable to the new machine by six years to determine the total differential decrease in cost. Then add the proceeds from the sale of old machine. The cost of the new machine is the purchase cost. The difference is either an increase or decrease in costs. The machine shoutd be replaced only if there is cost savings. Feed back ' Check My Work Partially correct

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Principles

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso

9th Edition

978-0470317549, 9780470387085, 047031754X, 470387084, 978-0470533475

More Books

Students also viewed these Accounting questions