Differential Analysis for Machine Replacement Boyer Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $63,200, the accumulated depreciation is $25,300, its remaining useful life is five years, and its residual value is negligible. On May 4 of the current year, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $131,500. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on present and proposed operations: Proposed Operations $200,300 Sales Direct materials $68,300 Present Operations $200,300 $68,300 47,400 4,400 1,600 47,400 Direct labor Power and maintenance Taxes, insurance, etc. Selling and administrative expenses 23,400 5,200 47,400 $144,300 Total expenses $169,100 a. Prepare a differential analysis dated May 4 to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter "o". If required, use a minus sign to indicate a loss Differential Analysis Continut with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 4 Continue with Old Replace Differential Machine Old Machine Effects Alternative 11 / Alternative Alternative 21 a. Prepare a differential analysis dated May 4 to determine whether to continue with the old machine (Alternative 1) or replace the old machine (Alternative 2). Prepare the analysis over the useful life of the new machine. If an amount is zero, enter o". If required, use a minus sign to indicate a loss. Differential Analysis Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2) May 4 Continue with Old Replace Differential Machine Old Machine Effects (Alternative 1) (Alternative 2) (Alternative 2) Revenues: Sales (5 years) Costs: Purchase price Direct materials (5 years) Direct labor (5 years) Power and maintenance (5 years) Taxes, insurance, etc. (5 years) Selling and admin, expenses (5 years) Profit (Loss) b. Based only on the data presented, should the proposal be accepted? Should not be accepted to consider before a final decision is made. c. Differences in capacity between the two alternatives is relevant