Question
Lexigraphic Printing Company is considering replacing a machine that has been used in its factory for four years. Relevant data associated with the operations of
Lexigraphic Printing Company is considering replacing a machine that has been used in its factory for four years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows: Old Machine Cost of machine, 10-year life $88,820 Annual depreciation (straight-line) 9,050 Annual manufacturing costs, excluding depreciation 23,470 Annual non-manufacturing operating expenses 6,020 Annual revenue 74,030 Current estimated selling price of machine 29,610 New Machine Purchase price of machine, six-year life $119,515 Annual depreciation (straight-line) 20,040 Estimated annual manufacturing costs, excluding depreciation 6,805 Annual non-manufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Required: 1. Prepare a differential analysis as of April 30 comparing operations using the present machine (Alternative 1) with operations using the new machine (Alternative 2). The analysis should indicate the total differential income that would result over the six-year period if the new machine is acquired. Refer to the lists of Labels and Amount Descriptions for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter "0". A colon (:) will automatically appear if required. 2. List other factors that should be considered before a final decision is reached.
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