Sure-Bilt Construction Company is considering selling excess machinery with a book value of $278,400 (original cost of $398,600 less accumulated depreciation of $120,200) for $277,200, less a 5% brokerage commission. Alternatively, the machinery can be leased to another company for a total of $286,100 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Construction Company's costs of repairs, insurance, and property tax expenses are expected to be $24,700 a. Prepare a differential analysis, dated May 25 to determine whether Sure-Bilt should lease (Alternative 1) or sell (Alternative 2) the machinery. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machinery (Alt. 1) or Sell Machinery (Alt. 2) May 25 Differential Effect Lease Machinery Sell Machinery on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues 286,100 277,200 -8,900 Costs -24,700 -14.305 X 10,395 x 0 2.500 Feedback Check My Work a. For the continue and replace alternatives subtract the costs from the revenues. Multiply the variable production cost for the eight year Ite. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2. Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Continue with the old machine X Feedback TTUCESOS ITSETOETUSTE ZOO Costs: Purchase price 0 -280.500 X -280.500X -305.400 X Variable productions costs (8 years) Income (Loss) -244.200 x 61.200 x -305.400 X -307.900 X 5 -2.500 X Feedback Check My Work a. For the continue and replace alternatives subtract the costs from the revenues. Multiply the variable production cost for the eight year ife. Determine the differential effect on income of the revenues, costs, and income (loss) by subtracting alternative 1 from alternative 2 > Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Replace the old machine X Feedback Check My Work Incorrect b. What is the sunk cost in this situation? The sunk cost is Feedback Check My Work Incorrect Feedback Check My Work Partially correct Sell or Process Further Bunyon Lumber Company incurs a cost of $394 per hundred board feet (hbf) in processing certain "rough-cut lumber, which it sells for $548 per hbf. An alternative is to produce a "finished cut" at a total processing cost of $527 per hbf, which can be sold for $772 per hbf. Prepare a differential analysis dated August 9 on whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Sell Rough-Cut (Alt. 1) or Process Further into Finished Cut (Alt. 2) August 9 Process Differential Further into Effect Rough-Cut Finished Cut on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues, per 100 board ft. Costs, per 100 board ft. Income (Loss), per 100 board ft. Sell > Determine whether to sell rough-cut lumber (Alternative 1) or process further into finished-cut lumber (Alternative 2). Sell rough-cut lumber Process further and sell finished-cut lumber