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$455,600Current accumulated depreciation307,000Estimated annual variable manufacturing costs for machine71,200Estimated selling price of machine150,100Estimated remaining useful life (in years)6New Machine:Purchase cost$811,100Estimated annual variable manufacturing costs for machine42,400Estimated residual value0Estimated useful life (in years)6

Select the relevant or irrelevant information below:

Annual variable costs of old machineRelevant

Selling price of old machineRelevant

Matching livesRelevant

Purchase price of new machineRelevant

Accumulated depreciation of old machineIrrelevant

Fill in the differential analysis.

Replace or Keep Decision

Differential Analysis Report

Cost of replacing old machine:

Annual differential decrease in cost$_______

x number of years_____

Total differential decrease in cost______

Proceeds from sale of present machine_______ $_______

Cost of new machine $_____

Net differential (increase)/decrease in cost, six year total $________