Machine Replacement Decision A company is considering replacing an old plece of machinery, which cost $597,000 and has $350,700 of accumulated depreciation to date, with a new machine that has a purchase price of $485,200. The old machine could be sold for $61,800. The annual variable production costs associated with the old machine are estimated to be $156,200 per year for eight years. The annual variable production costs for the new machine are estimated to be $102,200 per year for eight years. a. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "O". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) April 29 Replace Differential Old Effect Machine (Alternative 1) (Alternative 2) (Alternative 2) Continue with Old Machine on Income Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Save and Som Assignment for Grading Emainstruct Check My Work 2 more Check My Work uses remaining VIS a. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old enter "O". For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) April 29 Continue Replace Differential with Old Old Effect Machine Machine on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine 61,800 61,800 Costs: Purchase price 485,200 -485,200 Variable productions costs (8 years) Income (Loss) Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. b. What is the sunk cost in this situation? The sunk cost is Check My Work 2 more Check My Work uses remaining Emainstructor Save and All work saved