Differential Analysis for Machine Replacement Proposal are as follows: Old Machine Cost of machine, 10 -year life Annual depreciation (straight-line) Annual manufacturing costs, excluding depreciation Annual nonmanufacturing operating expenses Annual revenue Current estimated selling price of the machine New Machine Purchase price of machine, 6-year life Annual depreciation (straight-line) Estimated annual manufacturing costs, excluding depreciation $120,000 12,000 30,000 22,500 90,000 40,000 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Required: over the 6-year period if the new machine is acquired. If an amount is zero, enter " 0 ". If required, use a minus sign to indicate a loss. Differential Analysis Continue with (Alt. 1) or Replace (Alt. 2) Old Machine November 30 Line Item Description Continue with Old Replace Old Machine Differential Effect over the 6-year period if the new machine is acquired. If an amount is zero, enter " 0 ". If required, use a minus sign to indicate a loss. Differential Analysis Continue with (Alt. 1) or Replace (Alt. 2) Old Machine November 30 Line Item Description Revenues: Proceeds from sale of old machine s Costs: Purchase price Annual manufacturing costs ( 6 yrs.) Profit (loss) Feedback Check My Work 2. Identify the factor that needs to be considered for asset replacement decision in a company. a. The quality of the machine and its working capacity b. The federal taxes payable The amount of investment required to replace or purchase the new machine d. All the above