Differential analysis |
|||
Continue with old machine (Alt. 1) or Replace Old Machine (Alt, 2) |
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Continue (Alt 1 ) |
Replace (Alt. 2) |
Differential effect on Income (Alt . 2) |
|
Variable cost |
$ 75,000.00 |
$ 30,000.00 |
$ 45,000.00 |
Sale price of old machine |
$ (3,200.00) |
$ 3,200.00 |
|
Purchase price of new machine |
$ 42,000.00 |
$ (42,000.00) |
|
Net benefit |
$ 6,200.00 |
Variable cost is for 5 years
Morning Coffee Co. has an outdated piece of machinery that the company is considering replacing Use...
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Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $597,700 and has $351,600 of accumulated depreciation to date, with a new machine that has a purchase price of $486,800. The old machine could be sold for $61,400. The annual variable production costs associated with the old machine are estimated to be $155,800 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,800 per year for...
Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $597,100 and has $348,000 of accumulated depreciation to date, with a new machine that has a purchase price of $484,500. The old machine could be sold for $64,000. 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 $100,100 per year for...
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Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $600,900 and has $351,600 of accumulated depreciation to date, with a new machine that has a purchase price of $484,200. The old machine could be sold for $64,100. The annual variable production costs associated with the old machine are estimated to be $156,400 per year for eight years. The annual variable production costs for the new machine are estimated to be $100,100 per year for...
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