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Instructions A company is considering replacing an old plece of machinery, which cost $617,500 and has $350,600 of accumulated depreciation to date with a new
Instructions A company is considering replacing an old plece of machinery, which cost $617,500 and has $350,600 of accumulated depreciation to date with a new machine that has a purchase price of $573,500. The old machine could be sold for $250,500. The annual variable production costs associated with the old machine are estimated to be $61,050 per year for eight years. The annual variable production costs for the new machine are estimated to be $18,150 per year for eight years. Required: A. Prepare a diferential analysis dated April 29 to determine whether to continue with (Alterativo 1) or replace (Aternative 2) the old machine. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement handling. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "o". A cokon () will automatically appear it required B. Determine whether the company should continue with (Aternative 1) or replace (Alternative 2) the old machin C. What is the sunk cost in this situation? Labels and Amount Descriptions Ad pri Labels ye April 29 Cash flows from investing activities Costs Revenues Amount Descriptions Gain on sale of investments Income (loss) Loss on sale of investments Proceeds from sale of old machine Purchase price Total costs Variable production costs (8 years) Differential Analysis A. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "o". A colon () will automatically appear it required Differential Analysis Continue with Old Machine (Aternative 1) or Replace Old Machine (Alternative 2) Labell Continue with Replace Old Old Machine Machine (Alternative 1) (Alternative 2) 1 Differential Effect on Income 2 (Alternative 2) 3 Lb 4 3 Label T A. DE B. Determine whether the company should continue with (Alternative 1) or replace (Alternative 2) the old machine. Continue with old machine nu Replace the old machine C. What is the sunk cost in this situation ? Book value of the old machine Future variable production costs Cost of the new machine
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