Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
14th Edition
ISBN: 9781337541398
Author: Carl Warren; James M. Reeve; Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 10, Problem 1BE
To determine
Differential Analysis: Differential analysis refers to the analysis of differential revenue that could be gained or differential cost that could be incurred from the available alternative options of business.
Whether Company M should sell or lease the machine.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Lease or Sell
Kincaid Company owns a equipment with a cost of $366,900 and accumulated depreciation of $56,000 that can be sold for $274,700, less a 4% sales
commission. Alternatively, Kincaid Company can lease the equipment to another company for three years for a total of $287,000, at the end of which there is no
residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Kincaid Company on the equipment would total $15,200
over the three years.
Prepare a differential analysis on March 23 as to whether Kincaid Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in
which you must enter subtracted or negative numbers use a minus sign.
Differential Analysis
Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2)
March 23
Differential Effect
on Income
(Alternative 2)
Lease Equipment
(Alternative 1)
Sell Equipment
(Alternative 2)
Revenues
Costs
$1
Lease the equipment
Sell the equipment
ny lease (Alternative 1)…
Lease or Sell
Kincaid Company owns equipment with a cost of $362,000 and accumulated depreciation of $56,000 that can be sold for $275,600, less a 4% sales commission. Alternatively,
Kincaid Company can lease the equipment for three years for a total of $288,600, at the end of which there is no residual value. In addition, the repair, insurance, and property
tax expense that would be incurred by Kincaid Company on the equipment would total $15,800 over the three year lease.
a. Prepare a differential analysis on August 7 as to whether Kincaid Company should lease (Alternative 1) or sell (Alternative 2) the equipment. If required, use a minus sign to
indicate a loss.
Differential Analysis
Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2)
August 7
Lease
Sell
Differential
Equipment
(Alternative 1) (Alternative 2) (Alternative 2)
Equipment
Effects
Revenues
Costs
Profit (Loss)
b. Should Kincaid Company lease (Alternative 1) or sell (Alternative 2) the equipment?
Lease or Sell
Casper Company owns equipment with a cost of $366,800 and accumulated depreciation of $54,900 that can be sold for $277,500, less a 5% sales commission. Alternatively, Casper Company can lease the equipment for three years for a total of $288,100, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Casper Company on the equipment would total $15,800 over the three year lease.
a. Prepare a differential analysis on February 18, as to whether Casper Company should lease (Alternative 1) or sell (Alternative 2) the equipment.
Differential Analysis
Lease (Alt. 1) or Sell (Alt. 2) Equipment
February 18
Lease Equipment(Alternative 1)
Sell Equipment(Alternative 2)
Differential Effecton Income(Alternative 2)
Revenues
Costs
Income (Loss)
b. Should Casper Company lease (Alternative 1) or sell (Alternative 2) the equipment?
Chapter 10 Solutions
Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
Ch. 10 - Explain the meaning of (A) differential revenue,...Ch. 10 - A company could sell a building for 250,000 or...Ch. 10 - A chemical company has a commodity-grade and...Ch. 10 - A company accepts incremental business at a...Ch. 10 - Prob. 5DQCh. 10 - Prob. 6DQCh. 10 - Prob. 7DQCh. 10 - Although the cost-plus approach to product pricing...Ch. 10 - How does the target cost method differ from...Ch. 10 - Prob. 10DQ
Ch. 10 - Prob. 1BECh. 10 - Prob. 2BECh. 10 - Prob. 3BECh. 10 - Replace equipment A machine with a book value of...Ch. 10 - Prob. 5BECh. 10 - Prob. 6BECh. 10 - Prob. 7BECh. 10 - Prob. 8BECh. 10 - Prob. 1ECh. 10 - Prob. 2ECh. 10 - Prob. 3ECh. 10 - Prob. 4ECh. 10 - Prob. 5ECh. 10 - Prob. 6ECh. 10 - Prob. 7ECh. 10 - Prob. 8ECh. 10 - Prob. 9ECh. 10 - Differential analysis for machine replacement Kim...Ch. 10 - Sell or process further Calgary Lumber Company...Ch. 10 - Prob. 12ECh. 10 - Prob. 13ECh. 10 - Prob. 14ECh. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Product cost method of product costing Smart...Ch. 10 - Target costing Toyota Motor Corporation (TM) uses...Ch. 10 - Prob. 19ECh. 10 - Prob. 20ECh. 10 - Product decisions under bottlenecked operations...Ch. 10 - Total cost method of product pricing Based on the...Ch. 10 - Variable cost method of product pricing Based on...Ch. 10 - Differential analysis involving opportunity costs...Ch. 10 - Differential analysis for machine replacement...Ch. 10 - Differential analysis for sales promotion proposal...Ch. 10 - Prob. 4PACh. 10 - Product pricing using the cost-plus approach...Ch. 10 - Product pricing and profit analysis with...Ch. 10 - Prob. 1PBCh. 10 - Differential analysis for machine replacement...Ch. 10 - Prob. 3PBCh. 10 - Prob. 4PBCh. 10 - Prob. 5PBCh. 10 - Prob. 6PBCh. 10 - Service yield pricing and differential equations...Ch. 10 - Prob. 2ADMCh. 10 - Prob. 3ADMCh. 10 - Aaron McKinney is a cost accountant for Majik...Ch. 10 - Prob. 3TIF
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Lease or Sell Astro Company owns equipment with a cost of $367,300 and accumulated depreciation of $56,100 that can be sold for $273,800, less a 3% sales commission. Alternatively, Astro Company can lease the equipment for 3 years for a total of $285,800, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Astro Company on the equipment would total $15,000 over the 3-year lease. a. Prepare a differential analysis on October 29 as to whether Astro Company should lease (Alternative 1) or sell (Alternative 2) the equipment. If required, use a minus sign to indicate a loss. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) October 29 Lease Sell Line Item Description Equipment Equipment Revenues Costs Profit (Loss) Differential Effects (Alternative 1) (Alternative 2) (Alternative 2) 255,800✔ 273,800 ✓ -12.000 Fandack Check My Work Subtract the lease costs from the lease revenues.…arrow_forwardLease or Sell Ferrigno Company owns equipment with a cost of $225,000 and accumulated depreciation of $81,000 that can be sold for $113,000 less a 6% sales commission. Alternatively, Ferrigno Company can lease the equipment to another company for 5 years for a total of $115,100, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Ferrigno Company on the equipment would total $11,890 over the 5 years. Prepare a differential analysis on March 23 as to whether Ferrigno Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Equipement (Alt. 1) or Sell Equipment (Alt. 2) March 23 Differential Lease Sell Effect Equipment Equipment (Alternative 2) (Alternative 1) (Alternative 2) Revenues $ $ $ Costs Profit (loss) $ $ $…arrow_forwardLease or Sell Ferrigno Company owns equipment with a cost of $225,000 and accumulated depreciation of $81,000 that can be sold for $113,000 less a 6% sales commission. Alternatively, Ferrigno Company can lease the equipment to another company for 5 years for a total of $115,100, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Ferrigno Company on the equipment would total $11,890 over the 5 years. Prepare a differential analysis on March 23 as to whether Ferrigno Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) March 23 ---------------- Lease Sell Differential ---------------- Equipment Equipment Effect --------------- (Alternative 1) (Alternative 2) (Alternative 2) Revenues $ $ $ Costs…arrow_forward
- Lease or sell Plymouth Company owns equipment with a cost of $500,000 and accumulated depreciation of $330,000 that can be sold for $290,000, less a 3% sales commission. Alternatively, Plymouth Company can lease the equipment for four years for a total of $330,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Plymouth Company on the equipment would total $43,000 over the four-year lease. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Prepare a differential analysis on August 7 as to whether Plymouth Company should lease (Alternative 1) or sell (Alternative 2) the equipment. Use a minus sign to indicate costs or negative differential effect on income.arrow_forwardLease or sell Plymouth Company owns equipment with a cost of $550,000 and accumulated depreciation of $350,000 that can be sold for $330,000, less a 4% sales commission. Alternatively, Plymouth Company can lease the equipment for four years for a total of $400,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Plymouth Company on the equipment would total $35,000 over the four-year lease. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. Open spreadsheet Prepare a differential analysis on August 7 as to whether Plymouth Company should lease (Alternative 1) or sell (Alternative 2) the equipment. Use a minus sign to indicate costs or negative differential effect on income. Differential Analysis Lease (Alt. 1) or Sell (Alt. 2) Equipment August 7 Lease…arrow_forward1. Lease or Sell Astro Company owns a equipment with a cost of $365,000 and accumulated depreciation of $52,200 that can be sold for $275,000, less a 4% sales commission. Alternatively, Astro Company can lease the equipment to another company for three years for a total of $285,800, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Astro Company on the equipment would total $16,300 over the three years. 2. Discontinue a Segment Product T has revenue of $195,400, variable cost of goods sold of $116,100, variable selling expenses of $33,900, and fixed costs of $58,500, creating a loss from operations of $13,100. Prepare a differential analysis as of May 9, to determine whether Product T should be continued (Alternative 1) or discontinued (Alternative 2), assuming fixed costs are unaffected by the decision. If an amount is zero, enter "0". For those boxes in which you must enter subtracted or…arrow_forward
- Yokoyama Company owns a machine with a cost of $92,000 and accumulated depreciation of $18,500 that can be sold for $66,000 less a 5% sales commission. Alternatively, Yokoyama Company can lease the machine to another company for 3 years for a total of $74,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Yokoyama Company on the machine would total $10,500 over the 3 years. Prepare a differential analysis on February 21 as to whether Yokoyama Company should lease (Alternative 1) or sell (Alternative 2) the machine. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Machine (Alt. 1) or Sell Machine (Alt. 2) February 21 Differential Effect Lease Sell Machine Machine (Alternative 2) (Alternative 1) (Alternative 2) Revenues Costs Profit (loss) Should Yokoyama Company lease (Alternative 1) or sell (Alternative 2) the machine?arrow_forwardLease or Sell Casper Company owns equipment with cost of $366,500 and accumulated depreciation of $53,400 that can be sold for $277,300, less a 3% sales commission. Alternatively, Casper Company can lease the equipment for three years for a total of $287,100, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Casper Company on the equipment would total $15,900 over the three year lease. a. Prepare a differential analysis on August 7 as to whether Casper Company should lease (Alternative 1) or sell (Alternative 2) the equipment. If required, use a minus sign to indicate a loss. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) August 7 Lease Sell Differential Equipment (Alternative 1) (Alternative 2) (Alternative 2) Equipment Effects Revenues Costs Profit (Loss) b. Should Casper Company lease (Alternative 1) or sell (Alternative 2) the equipment?arrow_forwardDuncan Company owns a machine with a cost of $308,440 and accumulated depreciation of $63,270 that can be sold for $264,500 less a 6% sales commission. Alternatively, Duncan Company can lease the machine to another company for three years for a total of $276,490, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Duncan Company on the machine would total $24,440 over the three years. Required: 1. Prepare a differential analysis on February 21 as to whether Duncan Company should lease (Alternative 1) or sell (Alternative 2) the machine. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. For those boxes in which you must enter subtracted or negative numbers use a minus sign. If there is no amount or an amount is zero, enter “0”. A colon (:) will automatically appear if required. 2. Should Duncan Company lease (Alternative 1) or sell…arrow_forward
- Bullwinkle Company owns a equipment with a cost of $367,200 and accumulated depreciation of $54,100 that can be sold for $277,400, less a 5% sales commission. Alternatively, Bullwinkle Company can lease the equipment to another company for three years for a total of $288,900, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by Bullwinkle Company on the equipment would total $16,200 over the three years. Prepare a differential analysis on March 23 as to whether Bullwinkle Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) March 23 Lease Equipment(Alternative 1) Sell Equipment(Alternative 2) Differential Effecton Income(Alternative 2) Revenues $fill in the blank 83e0dafc0fa2fd6_1 $fill in the blank…arrow_forwardMcFadden Company owns equipment with a cost of $475,000 and accumulated depreciation of $280,000 that can be sold for $175,000, less a 7% sales commission. Alternatively, McFadden Company can lease the equipment for four years for a total of $180,000, at the end of which there is no residual value. In addition, the repair, insurance, and property tax expense that would be incurred by McFadden Company on the equipment would total $35,500 over the four-year lease. a. Prepare a differential analysis on February 18 as to whether McFadden Company should lease (Alternative 1) or sell (Alternative 2) the equipment. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) February 18 Revenues Costs Income (Loss) Lease Equipment Sell Equipment (Alternative 1) (Alternative 2) Differential Effect on Income (Alternative 2)arrow_forwardBullwinkle Company owns a equipment with a cost of $365,300 and accumulated depreciation of $55,400 that can be sold for $277,400, less a 3% sales commission. Alternatively, Bullwinkle Company can lease the equipment to another company for three years for a total of $286,700, at the end of which there is no residual valoe. In addition, the repair, insurance, and property tax expense that would be incurred by Bullwinkle Company on the equipment would total $15,100 over the three years. Prepare a differential analysis on March 23 os to whether Buliwinkle Company should lease (Alternative 1) or sell (Alternative 2) the equipment. For those boxes in which you must enter subtracted or negative numbers use a minus sign. Differential Analysis Lease Equipment (Alt. 1) or Sell Equipment (Alt. 2) March 23 Differential Effect Lease Equipment Sell Equipment (Alternative 1) on Income (Alternative 2) (Alternative 2) Revenues Costs Income (Loss) Should Bullwinkle Company lease (Alternative 1) or sell…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Property, Plant and Equipment (PP&E) - Introduction to PPE; Author: Gleim Accounting;https://www.youtube.com/watch?v=e_Hx-e-h9M4;License: Standard Youtube License