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Instructions Kim Kwon Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine
Instructions Kim Kwon Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $61,880, the accumulated depreciation is $23,430, its remaining useful life is five years, and its residual value is negligible. On May 4 of the current year, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $180,720 The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on present and proposed operations: Present Proposed 2 Sales 3 Direct materials 4 Direct labor 5 Power and maintenance 6 Taxes, insurance, etc. 7Selling and administrative expenses 8Total expenses $205,380.00 $72,265.00 52,625.00 5,230.00 1,365.00 45,445.00 $176,930.00 $205,380.00 $72,265.00 0.00 17,735.00 5,840.00 5,445.00 $141,285.00
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