UsingIncremental Analysis

Fortress Hill Corporation has assembled the following information related to the purchase of a new cable car:

Peaks Machine	Valley Machine
Increase in revenue	$44,200	$49,300
Increase in annual operating costs:
Direct materials	12,200	12,200
Direct labor	10,200	10,600
Variable overhead	24,500	26,900
Fixed overhead (including depreciation)	12,400	12,400

Using incremental analysis and only relevant information, compute the difference in favor of the Valley machine.

	Difference in Favor of Valley Machine
Increase in revenue	$
Increase in annual operating costs
	Direct labor
	Variable overhead
	Total increase in operating costs	$
Resulting change in operating income	$