Lease or Sell

Bullwinkle Company owns a machine with a cost of $365,600 and accumulated depreciation of $52,600 that can be sold for $276,800, less a 3% sales commission. Alternatively, the machine can be leased by Bullwinkle Company for three years for a total of $286,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Bullwinkle Company on the machine would total $15,000 over the three years.

Prepare a differential analysis on January 12, as to whether Bullwinkle Company should lease (Alternative 1) or sell (Alternative 2) the machine.

Differential Analysis
Lease Machine (Alt. 1) or Sell Machine (Alt. 2)
January 12
	Lease Machine (Alternative 1)	Sell Machine (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$	$	$
Costs
Income (Loss)	$	$	$

Should Bullwinkle Company lease (Alternative 1) or sell (Alternative 2) the machine?

Discontinue a Segment

Product A has revenue of $194,300, variable cost of goods sold of $115,800, variable selling expenses of $33,700, and fixed costs of $60,000, creating a loss from operations of $15,200.

Prepare a differential analysis as of September 12, to determine if Product A should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter zero "0". Use a minus sign to indicate a loss.

Differential Analysis
Continue Product A (Alt. 1) or Discontinue Product A (Alt. 2)
September 12
	Continue Product A (Alternative 1)	Discontinue Product A (Alternative 2)	Differential Effect on Income (Alternative 2)
Revenues	$	$	$
Costs:
Variable cost of goods sold
Variable selling and admin. expenses
Fixed costs
Income (Loss)	$	$	$

Determine if Product A should be continued (Alternative 1) or discontinued (Alternative 2).