Question
White Noise Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $63,200,
White Noise Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $63,200, the accumulated depreciation is $25,300, its remaining useful life is five years, and its residual value is zero. A proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $119,000. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on current and proposed operations: Current Operations Proposed Operations Sales $200,300 $200,300 Direct materials $68,300 $68,300 Direct labor 47,400 15,800 Power and maintenance 4,400 7,600 Taxes, insurance, etc. 1,600 5,200 Selling and administrative expenses 47,400 47,400 Total expenses $169,100 $144,300 Annual net differential decrease in costs and expensesnew machine?
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