Differential Analysis for Machine Replacement no significant residual value. For use in evaluating the proposal, the managerial accountant accumulated the following annual data on present and proposed operations: \begin{tabular}{lrr} & PresentOperations & Proposed \\ & $238,400 & $238,400 \\ \hline Sales & $81,200 & $81,200 \\ Direct materials & 56,400 & - \\ Direct labor & 5,300 & 27,800 \\ Power and maintenance & 1,900 & 6,200 \\ Taxes, insurance, etc. & 56,400 & 56,400 \\ Selling and administrative & & \\ expenses & $201,200 & $171,600 \\ \hline Total expenses & & \end{tabular} to indicate a loss. Differential Analysis Continue with (Alt. 1) or Replace (Alt. 2) Old Machine October 1 Line Item Description Continue with Replace Old Machine Differential Effects Continue with Old Machine (Alternative 2) Differential Effects 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)