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	$436,000
Current accumulated depreciation	322,900
Estimated annual variable manufacturing costs for machine	71,900
Estimated selling price of machine	168,600
Estimated remaining useful life (in years)	6
New Machine:
Purchase cost	$813,600
Estimated annual variable manufacturing costs for machine	45,700
Estimated residual value	0
Estimated useful life (in years)	6

Select the relevant or irrelevant information below:

Annual variable costs of old machine	Relevant
Selling price of old machine	Relevant
Matching lives	Relevant
Purchase price of new machine	Relevant
Accumulated depreciation of old machine	Irrelevant

Fill in the differential analysis.

Replace or Keep Decision Differential Analysis Report
Cost of replacing old machine:
Annual differential decrease in cost	$fill in the blank 7d16ad02507d078_6
x number of years	fill in the blank 7d16ad02507d078_7
Total differential decrease in cost	fill in the blank 7d16ad02507d078_8
Proceeds from sale of present machine	fill in the blank 7d16ad02507d078_9	$fill in the blank 7d16ad02507d078_10
Cost of new machine		fill in the blank 7d16ad02507d078_11
Net differential (increase)/decrease in cost, six year total