Differential Analysis for Machine Replacement Proposal F t Tooling Company is considering replacing a machine that has been used in its factory for two years. Relevant data associated with the operations of the old machine and the machine, neither of which has any estimated residual value, are as follows: Old Machine Cost of machine, eight-year life Annual depreciation (straight-line) Annual manufacturing costs, excluding depreciation Annual nonmanufacturing operating expenses Annual revenue Current estimated selling price of the machine $38,000 4.750 12.400 2.700 32,400 12.900 $57.000 New Machine Cost of machine. year life Annual depreciation (straight-line) Estimated annual manufacturing costs, exclusive of depreciation Annual no manufacturing operating and r e c ted to be rected by purchase of the machine Required: 1. Prepare a differential analysis as of November comparing operations using the present machine (Alternative 1) with operations using the new machine (Alternative 2). The analysis should indicate the differential income that would result over the sheyear period of the new machine is acquired. If an amount is sero, enter "o". Use a minus sign to indicate subtracted amounts negative amounts, or a loss. Differential Analysis Continue with Old Machine (AIL. 1) or Replace Old Machine (Alt. 2) November Continue with Old Machine (Alternative 1) ReplaceOld Machine (Alternative 2) Differential Effect on Income (Alternative 2) Revenues Proceeds from sale of old machine 12.000 Purchase price Annual manuacturing costs (y) -54,000 74400 75.300 -25.500