CALCULATOR INTER VERSION Expand Your Critical Thinking 23-01 Your answer is partially correct. Try again Aurora Company is considering the purchase of a new machine. The invoice price of the machine is $112.000, freight charges are estimated to be $3.000, and installation costs expected to be $5,000. Salvage value of the new equipment is expected to be zero after a useful life of 5 years. Existing equipment could be retained and used for an additional 5 years if the new machine is not purchased. At that time, the salvage value of the equipment would be zero. If the new machine is purchased now, the existing machine would have to be scrapped. Aurora's accountant, Usah Huang, has accumulated the following data regarding annual sales and expenses with and without the new machine. 1. without the new machine, Aurora can sell 10.000 units of product annually at a per unit selling price of $100. If the new machine is purchased, the number of its produced and sold would increase by 10%, and the selling price would remain the same. 2. The new machine is faster than the old machine, and it is more efficient in its usage of materials. With the old machine the gross profit rate will be 25 of sales, whereas the rate will be 30% of sales with the new machine 3. Annual selling expenses are $144,000 with the current equipment. Because the new equipment would produce a greater number of units to be sold, annual selling expenses are expected to increase by 10% if it is purchased. 4. Annual administrative expenses are expected to be $80,000 with the old machine, and $90,000 with the new machine 5. The current book value of the existing machine is $20,000. Aurora uses straight-line depreciation 45 years, Conore Income tax effects.) (Enter negative amounts using either a negative in preceding the number. Prepare an incremental analysis for the parentheses e.g. (45).) Net Income increase (Decrease) Retain Old Machine Purchase New Machine Sales Costs and expenses 4. Annual administrative expenses are expected to be $80,000 with the old machine, and $90,000 with the new machine. 5. The current book value of the existing machine is $29,000. Aurora uses straight-line depreciation. Prepare an incremental analysis for the 5 years. (Ignore income tax effects.) (Enter negative amounts using either a negati parentheses e.g. (45).) Retain Old Machine Purchase New Machine Net Income Increase (Decrease) Sales Costs and expenses Cost of goods sold Selling expenses Xxxww ... Administrative expenses Purchase price Total costs and expenses Net income Should Aurora keep the existing machine or buy the new machine? BI Challenge Exercise 23-01 a-c (Part Level Submission) Sheffield Company manufactures outdoor fireplaces. For the first 9 months of 2020, the company reported the following operating results while operating at 80% of plant God Sales (75,800 unit) $6,746,200 Cost of goods sold 5,021,750 Gross profit 1,724,450 Operating expenses 758,000 Net income $966,450 Cost of goods sold was 80% variable and 20% fixed; operating expenses were 70% variable and 30% fored. In October, Sheffield Company receives a special order for 4,100 fireplaces at $53 each from Langston's Landscape Company. Acceptance of the order would result in an additional $6,300 of shipping costs but no increase in fixed operating expenses. Your answer is partially correct. Try again. Prepare an incremental analysis for the special order. (Enter loss using either a negative sign preceding the number 02,945 or parentheseses (2.9451) Net Income Increase (Decrease) Birt order Accept order Your answer is partially correct. Try again. Before Sheffield could give Langston's Landscape Company an answer they received a special order from Benson Building Supply for 15,500 fireplace, Benon is willing to pay per fireplace but they want a special design imbedded into the fireplace that increases cost of goods sold by $67,650. The special design also requires the purchase of a part that costs $5,200 and will have no future use for Sheffield Company, Benson Building & Supply will pick up the fireplaces so no shipping costs are involved. Due to capacity imitations, Sheffield cannot accept both special orders. Which order should be accepted? Document your decision by preparing an incremental analysis for Benson's order ter lossing thera negative sign preceding the number e.o. -2,945 or parentheses (2.945).) Net Income Increase (Decrease) Reject order Accept order 1089000 1080000 Revenues Costs Cost of Goods Sold Operating Expenses Unique part Net Income