Franklin Printing Company is considering replacing a machine that has been used in its factory for four years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows:

Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.
1. Prepare a differential analysis as of February 29, 2012, comparing operations using the present equipment (Alternative 1) with operations using the new equipment (Alternative 2). The analysis should indicate the total differential income that would result over the six-year period if the new machine is acquired.
2.  List other factors that should be considered before a final decision is reached.

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Old Machine Cost of machine, 10-year life $108,000 Annual depreciation (straight-line) Annual manufacturing costs, excluding depreciation Annual nonmanufacturing operating expenses 10,800 38,600 12,300 95,000 Annual revenue Current estimated selling price of machine 35,900 New Machine Cost of machine, six-year life Annual depreciation (straight-line) Estimated annual manufacturing costs, exclusive of depreciation $138,000 23,000 18,200