Current Attempt in Progress Carla Vista Timber Corporation uses a machine that removes the bark from cut timber. The machine is unreliable and results in a significant amount of downtime and excessive labor costs. Management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labor costs. Data are presented below for the two machines: Old Machine New Machine Original purchase cost $326,400 $355,200 Accumulated depreciation 220,800 Estimated life 5 years 5 years It is estimated that the new machine will produce annual cost savings of $81,600. The old machine can be sold to a scrap dealer for $8,000. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. Determine whether the company should purchase the new machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0 for the amounts.) Retain Replace Net Incoi Equipment Equipment Increase/(Der 2$ 2$ 2$ $4 2$ The company O purchase the new machine. %24 <> <> <> <>

Current Attempt in Progress Carla Vista Timber Corporation uses a machine that removes the bark from cut timber. The machine is unreliable and results in a significant amount of downtime and excessive labor costs. Management is considering replacing the machine with a more efficient one which will minimize downtime and excessive labor costs. Data are presented below for the two machines: Old Machine New Machine Original purchase cost $326,400 $355,200 Accumulated depreciation 220,800 Estimated life 5 years 5 years It is estimated that the new machine will produce annual cost savings of $81,600. The old machine can be sold to a scrap dealer for $8,000. Both machines will have a salvage value of zero if operated for the remainder of their useful lives. Determine whether the company should purchase the new machine. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Do not leave any field blank. Enter 0 for the amounts.) Retain Replace Net Incoi Equipment Equipment Increase/(Der 2$ 2$ 2$ $4 2$ The company O purchase the new machine. %24 <> <> <> <>

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter12: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 12.2.2P: Differential analysis report for machine replacement proposal Catalina Tooling Company is...

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