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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

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 $53,900, the accumulated depreciation is $21,600, 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 $112,100. 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 Operations Proposed Operations
Sales $170,900 $170,900
Direct materials $58,200 $58,200
Direct labor 40,400
Power and maintenance 3,800 19,900
Taxes, insurance, etc. 1,300 4,500
Selling and administrative expenses 40,400 40,400
Total expenses $144,100 $123,000

Question Content Area

a. analysis dated May 4, to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter "0".

Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) Differential Effect on Income (Alternative 2)
Sales (5 years)
Costs:
Purchase price

Direct materials (5 years)

Direct labor (5 years)

Power and maintenance (5 years)

Taxes, insurance, etc. (5 years)

Selling and admin. expenses (5 years)

Income (Loss)

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