Differential analysis for machine replacement proposal

Flint Tooling Company is considering replacing a machine that has been used in its factory for $4$ years. Relevant data associated with the

operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows:

Old Machine

New Machine

Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine.

Required:

Prepare a differential analysis as of November $8$ comparing operations using the present machine $($Alternative $1)$ with operations using the

new machine $($Alternative $2).$ The analysis should indicate the differential profit that would result 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 Old Machine $($Alt$.1)$ or Replace Old Machine $($Alt$.2)$

November $8$

What other factors should be considered before a final decision is reached?

a$.$ Are there any improvements in the quality of work turned out by the new machine?

b$.$ What opportunities are available for the use of the funds required to purchase the new machine?

c$.$ Are there any improvements in the quality of work turned out by the new machine and what opportunities are available for the use of the

funds required to purchase the new machine?

d$.$ What affect would this decision have on employee morale?

e$.$ None of these choices are correct.