Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $600,300 and has $352,400 of accumulated depreciation to date, with a new machine that has a purchase price of $485,600. The old machine could be sold for $61,200. The annual variable production costs associated with the old machine are estimated to be $156,300 per year for eight years. The annual variable production costs for the n machine are estimated to be $100,200 per year for eight years. a.1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 29 Continue Replace with Old Old Differential Machine Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine Costs: Purchase price Variable productions costs (8 years) Profit (Loss)

Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $600,300 and has $352,400 of accumulated depreciation to date, with a new machine that has a purchase price of $485,600. The old machine could be sold for $61,200. The annual variable production costs associated with the old machine are estimated to be $156,300 per year for eight years. The annual variable production costs for the n machine are estimated to be $100,200 per year for eight years. a.1 Prepare a differential analysis dated May 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 29 Continue Replace with Old Old Differential Machine Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Proceeds from sale of old machine Costs: Purchase price Variable productions costs (8 years) Profit (Loss)

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 9E: Machine replacement decision A company is considering replacing an old piece of machinery, which...

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