Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery...

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Differential Analysis for a Lease or Sell Decision Granite Construction Company is considering selling excess machinery with

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Answer 1

Answer #1


Differential Analysis
Lease Machinery (Alt.1) or Sell machinery (Alt.2)
	Lease machinery (Alt.1)	Sell machinery (Alt.2)	Differential Effect on income
Revenue	$284,700	$277,000	-$7,700
Costs	$25,400	$13,850	$11,550
Income (Loss)	$259,300	$263,150	$3,850

Since the differential effect on income is $3,850 the company should sell the machinery as income earned on selling the machinery is more than leasing the machinery.
Therefore, it is advisable to sell the machinery.

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Answer 2

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