A commercial oven with a book value of $56,160 has an estimated remaining five-year life. A proposal is offered to sell the oven for $17,550 and replace it with a new oven costing $100,320. The new machine has a five-year life with no residual value. The new machine would reduce annual maintenance costs by $19,290.Provide a differential analysis on the proposal to replace the commercial oven.Annual maintenance cost reduction$fill in the blank 1 Number of years applicablefill in the blank 2 Total differential decrease in cost$fill in the blank 3 Proceeds from sale of equipmentfill in the blank 4$fill in the blank 5Cost of new equipment fill in the blank 6Net differential decrease in cost from replacing equipment $fill in the blank 7

Differential analysis (likewise called incremental examination) is an administration bookkeeping…

Answered: A commercial oven with a book value of…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 4BE: Replace equipment A machine with a book value of 80,000 has an estimated five-year life. A proposal...

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A commercial oven with a book value of $56,160 has an estimated remaining five-year life. A proposal is offered to sell the oven for $17,550 and replace it with a new oven costing $100,320. The new machine has a five-year life with no residual value. The new machine would reduce annual maintenance costs by $19,290.

Provide a differential analysis on the proposal to replace the commercial oven.

Annual maintenance cost reduction	$fill in the blank 1
Number of years applicable	fill in the blank 2
Total differential decrease in cost	$fill in the blank 3
Proceeds from sale of equipment	fill in the blank 4	$fill in the blank 5
Cost of new equipment		fill in the blank 6
Net differential decrease in cost from replacing equipment		$fill in the blank 7

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