Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $599,200 and has $348,700 of accumulated depreciation to date, with a new machine that has a purchase price of $483,800. The old machine could be sold for $63,000. The annual variable production costs associated with the old machine are estimated to be $158,400 per year for eight years. The annual variable production costs for the new machine are estimated to be $101,000 per year for eight years. a. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) April 29 Replace Old Machine (Alternative 1) (Alternative 2) (Alternative 2) Continue with Old Machine Differential Effect on Income Revenues: Proceeds from sale of old machine Costs: Purchase price Variable productions costs (8 years) Income (Loss) Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Continue with the old machine his situation? Replace the old machine

Question
Machine Replacement Decision
A company is considering replacing an old piece of machinery, which cost $599,200 and has $348,700 of accumulated depreciation to date, with a new machine that has a
purchase price of $483,800. The old machine could be sold for $63,000. The annual variable production costs associated with the old machine are estimated to be $158,400
per year for eight years. The annual variable production costs for the new machine are estimated to be $101,000 per year for eight years.
a. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter
"0". For those boxes in which you must enter subtracted or negative numbers use a minus sign
Differential Analysis
Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)
April 29
Replace
Old
Machine
(Alternative 1) (Alternative 2) (Alternative 2)
Continue
with Old
Machine
Differential
Effect
on Income
Revenues:
Proceeds from sale of old machine
Costs:
Purchase price
Variable productions costs (8 years)
Income (Loss)
Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine.
Continue with the old machine
his situation?
Replace the old machine
Expand
Transcribed Image Text

Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $599,200 and has $348,700 of accumulated depreciation to date, with a new machine that has a purchase price of $483,800. The old machine could be sold for $63,000. The annual variable production costs associated with the old machine are estimated to be $158,400 per year for eight years. The annual variable production costs for the new machine are estimated to be $101,000 per year for eight years. a. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or negative numbers use a minus sign Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) April 29 Replace Old Machine (Alternative 1) (Alternative 2) (Alternative 2) Continue with Old Machine Differential Effect on Income Revenues: Proceeds from sale of old machine Costs: Purchase price Variable productions costs (8 years) Income (Loss) Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Continue with the old machine his situation? Replace the old machine

Expert Answer

1 Rating

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Accounting

Financial Accounting

Related Accounting Q&A

Find answers to questions asked by students like you.

Q: Which of the following accounts would not appear in the post closing trial balance? Equipment ,servi...

A: Post-closing trial balance:The post-closing trial balance is prepared after all the income statement...

Q: Cost of Units Transferred Out and Ending Work in Process The costs per equivalent unit of direct mat...

A: Calculation of cost of completed and transferred-out production and inventory in process, ending:

Q: A sales invoice included the following information: merchandise price, $6,000; terms 2/10, n/eom. As...

A: Formula to calculate cash received by the seller:Cash received by seller = Merchandise price - (Merc...

Q: Current Attempt in Progress Swifty Corporation sells its product for $50 per unit. During 2019, it p...

A: Definition of Variable Costing:Variable Costing is used in cost and managerial accounting. Under var...

Q: Calculation and Journal Entry for Employer Payroll Taxes 1.  Calculate the employer's payroll taxes ...

A: Click to see the answer

Q: Margin of Safety The Rachel Company has sales of $500,000, and the break-even point in sales dollars...

A: Margin of safety (MOS) computes the distinction between the real or planned sales and break-even poi...

Q: Pharoah Enterprises reported cost of goods sold for 2017 of $1,459,100 and retained earnings of $5,5...

A: Given Information for 2017COGS = $ 1,459,100Retained Earnings = $ 5,510, 900Overstated Ending Invent...

Q: At​ year-end, StickStick has cash of $ 22 comma 000$22,000​, current accounts receivable of $ 80 com...

A: Calculate the receivables turnover ratio.

Q: Alex Kelton recently won the jackpot in the Colorado lottery while he was visiting his parents. When...

A: Payout Option 1: Receive $100,000,000 in cash today. The present value of $100,000,000 today is $100...

Q: On January 1, 2021, Glanville Company sold goods to Otter Corporation. Otter signed an installment n...

A: Sales revenue: The amount earned by selling goods or services is known as sales revenue. This is the...

Q: Linburgh Inc manufactures model airplanes and repair kits. The planes account for 80% of the sales m...

A: Compute total contribution margin using sales mix for the two products as shown below:

Q: Schwer, Inc. issued $500,000 of 10%, 15-year bonds at 95 on July 1, 2012. Interest is payable semian...

A: Bonds may be issued at discount when the interest on the bonds is higher than the market interest ra...

Q: By December 31, 2017, Culver Corporation had performed a significant amount of environmental consult...

A: Pass a journal entry in the books of Culver Corporation for the fiscal year ended December 31, 2017.

Q: The following information is available for the first month of operations of Bahadir Company, a manuf...

A: Cost of goods sold has been calculated by taking the gross profit subtracted from the sales.

Q: Ayayai Corp. had the following long-term receivable account balances at December 31, 2016. Notes ...

A: Meaning of long-term receivables:Long Term Receivables are the debts owed to a company that are due ...

Q: Accounting Question

A: Inventory for Caleres if it would have used FIFO in 2015 = $546,745 + $4,094= $550,839.Inventory for...

Q: Altira Corporation provides the following information related to its merchandise inventory during th...

A: The system of inventory under which updates in inventory are  done on periodic basis is called as pe...

Q: how to do this questions? thanksssss!!

A: Hello, since you have posted a question with multiple sub-parts, we will solve first three subparts ...

Q: (assigning accounts receivable) - On April 1, 20017, Rasheed Company assigns $400,000 of its account...

A: Accounts receivable:Accounts receivable refers to the amounts to be received within a short period f...

Q: Luke Company sold some machinery to View Company on January 1, 2017, for which the cash selling pric...

A: Meaning of Amortization:Amortization is the process in which the amount paid in the installment of t...

Q: How is accounting for service businesses different than accounting for merchandising businesses?

A: Services business: A business that provide services to its customers is called service business. Som...

Q: 1-2 Please state what financial statement(s) the following accounts go on 1) Net income 2) End of-pe...

A: Financial statements: Financial statements are condensed summary of transactions communicated in the...

Q: how company's financial statement reflects the potential tax avoidance? For example?

A: Click to see the answer

Q: High-Low Method The manufacturing costs of Rosenthal Industries for the first three months of the ye...

A: Click to see the answer

Q: Brief Exercise 8-02 Record the following transactions on the books of Sheridan Co. (Omit cost of go...

A: Accounts receivable:Accounts receivable refers to the amounts to be received within a short period f...

Q: Operating Leverage Snellville Co. reports the following data: Sales $483,900 Variable costs 329,100 ...

A: Degree of Operating Leverage:  Degree of operating leverage is an efficiency ratio which evaluates t...

Q: E4-5 Recording Adjusting Entries and Reporting Balances in Financial Statements LO4-1, LO4-2 A+T Wil...

A: Hence, the adjusted amount of prepaid insurance is $600. Here, prepaid insurance expenses being an a...

Q: Vaughn Co. purchased land as a factory site for $456,000. The process of tearing down two old buildi...

A: Calculate the cost of land.

Q: Pearl Enterprises purchased store equipment by making a $2,960 cash down payment and signing a 1-yea...

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms. Th...

Q: The dollar-value LIFO method was adopted by Windsor Corp. on January 1, 2017. Its inventory on that ...

A: Calculation of amount of the inventory at December 31, 2017, under the dollar-value LIFO method: Thu...

Q: Equivalent Units of Materials Cost The Filling Department of Eve Cosmetics Company had 2,400 ounces ...

A: Process Costing: Process costing is a method of cost accounting, which is used when the production i...

Q: Number 5 Birchfield Company reports the following operating results for the month of February: sales...

A: The above-prepared statement is the income statement which the company will prepare without taking a...

Q: Munoz Corporation incurs the following annual fixed costs: Item Cost $ 62,000 Depreciation Officers'...

A: In order to compute the fixed cost per unit, the total annual fixed cost needs to be determined. The...

Q: Make or Buy A restaurant bakes its own bread for a cost of $160 per unit (100 loaves), including fix...

A: A technique which is used when the decision regarding choosing one of the alternatives is to be take...

Q: Target Profit Trailblazer Company sells a product for $210 per unit. The variable cost is $90 per un...

A: a. Determine break-even point in sales units.

Q: Please solve the following calculation and describe in steps how you solved it Revenues for 2028 $30...

A: Statement of Retained Earning is a financial statement that represents the changes to the retained e...

Q: High-Low Method for a Service Company Continental Railroad decided to use the high-low method and op...

A: Click to see the answer

Q: 1-1 Please state what financial statement each of the following go on 1) Net cash flows from operati...

A: Financial Statements are the formal records of the financial activities and position of a business, ...

Q: company's inventory records report the following in November of the current year:        Beginn...

A: Under LIFO inventory system, the goods received last are despatched first. Gross Profit is computed ...

Q: Silver Company purchased a machine for use in the business. The purchase price was $55,000 and the r...

A: The cost related to an asset which is to be used by the company for a longer period of time is to be...

Q: Calculate PayrollBreakin Away Company has three employees-a consultant, a computer programmer, and a...

A: Gross Pay: The total amount such as salary, wages, commissions, overtime, and bonus paid by an emplo...

Q: Equivalent Units of Conversion Costs The Filling Department of Eve Cosmetics Company had 3,800 ounce...

A: Equivalents units for production: The activity of a processing department in terms of fully complete...

Q: The stockholders' equity of Hammel Company at December 31, 2016, is shown below. 5% preferred s...

A: Hence, the effect of the transactions are mentioned in the above balance sheet.

Q: Christine and Doug are married. In 2018, Christine earns a salary of $250,000 and Doug earns a salar...

A: Medicare Tax: It is a tax imposed by the Federal Insurance Contributions Act on both employers and e...

Q: What are the 4 Phases of Auditing?

A: Audit: An audit is a systematic verification of the accounting records of a company to test their cr...

Q: What part of the A=L +SE does expenses and revenues under and are they CR or DR balances? Expenses c...

A: The accounting equation shows that sum of all assets= sum of liabilities + sum of owner's /stockhold...

Q: Marina Manufacturing is considering buying new equipment for its factory. The new equipment will red...

A: Compute degree of operating leverage before purchase of new equipment as shown below:

Q: Brief Exercise 9-08 Pharoah Company sells office equipment on July 31, 2022, for $23,160 cash. The ...

A: Calculate the loss on disposal of office equipment.

Q: Golf World sold merchandise to Mulligans for $48,000, offering terms of 1/15, n/30. Mulligans paid f...

A: In perpetual inventory system, sales and purchases are recorded net of cash discount. Perpetual inve...

Q: -/1 View Policies Current Attempt in Progress Bramble Corp. sells two types of computer hard drives....

A: Hence, $60 is the contribution margin for the Q-drive. It is the difference of per unit selling pric...