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: Original cost Current accumulated depreciation Estimated selling price of machine $424,000 321,400 Estimated annual variable manufacturing costs for machine 70,950 191,000 Estimated remaining useful life (in years) New Machine: Purchase cost $783,700 Estimated annual variable manufacturing costs for machine. 49,350 Estimated residual value Estimated useful life (in years) Replace or Keep Decision Differential Analysis Report Cost of replacing old machine: Annual differential decrease in cost x number of years Total differential decrease in cost Proceeds from sale of present machine Cost of new machine Net differential (increase)/decrease in cost, six year total 321,400 X 6 TOM MY WORK Multiply the annual differential decrease in costs attributable to the new machine by six years to determine the total differential decrease in ce 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 should be replaced only if there is cost savings