Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $597,300 and has $347,000 of accumulated depreciation to date, with a new machine that has a...




Machine Replacement Decision


A company is considering replacing an old piece of machinery, which cost $597,300 and has $347,000 of accumulated depreciation to date, with a new machine that has a purchase price of $486,300. The old machine could be sold for $64,400. The annual variable production costs associated with the old machine are estimated to be $156,000 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,900 per year for eight years.










a.1Prepare a differential analysis dated September 13, 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)
September 13
Continue with Old Machine (Alternative 1)Replace Old Machine (Alternative 2)Differential Effect on Income (Alternative 2)
Revenues:
Proceeds from sale of old machine$fill in the blank a0a9d7075007fb4_1$fill in the blank a0a9d7075007fb4_2$fill in the blank a0a9d7075007fb4_3
Costs:
Purchase pricefill in the blank a0a9d7075007fb4_4fill in the blank a0a9d7075007fb4_5fill in the blank a0a9d7075007fb4_6
Variable productions costs (8 years)fill in the blank a0a9d7075007fb4_7fill in the blank a0a9d7075007fb4_8fill in the blank a0a9d7075007fb4_9
Income (Loss)$fill in the blank a0a9d7075007fb4_10$fill in the blank a0a9d7075007fb4_11$fill in the blank a0a9d7075007fb4_12











a.2Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine.














b.What is the sunk cost in this situation?


The sunk cost is the $fill in the blank 868551fb0fccfa5_1.






Jun 01, 2022
SOLUTION.PDF

Get Answer To This Question

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here