I need help with "profit (loss)" for "Replace Old Machine(Alternative 2)" and "Differential Effects(Alternative 2)
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $600,700 and has $348,000 of accumulated depreciation to date, with a new machine that has a purchase price of $486,300. The old machine could be sold for $62,600. The annual variable production costs associated with the old machine are estimated to be $157,500 per year for eight years. The annual variable production costs for the new machine are estimated to be $100,700 per year for eight years. a.1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "O". If required, use a minus sign to indicate a loss Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 29 Continue Replace with Old Differential Machine Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues Proceeds from sale of old machine 62,600 Costs: Purchase price Variable productions conts (8 years) Old 0 62,600 486,300 406,300 1,260,000 H05,600 15440 Pront (Loss) 1,260,000 a. 1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 29 Continue Replace with Old Old Differential Machine Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine 0 62,600 62.600 Costs: Purchase price 0 486,300 486 300 Variable productions costs (8 years) 1,260,000 805,600 454.400 Profit (Loss) -1,260,000 0 x a.2 Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Replace the old machine Foothick b. What is the sunk cast in this situation? The sunk cost is