Differential Analysis for Machine Replacement Proposal Gutenberg Publishers Inc. 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, Cost of machine, 10-year life Old Machine $120,000 Annual depreciation (straight-line) 12,000 Annual manufacturing costs, excluding depreciation 30,000 Annual nonmanufacturing operating expenses Annual revenue 22,500 90,000 Current estimated selling price of the machine 40,000 New Machine Purchase price of machine, 6-year life Annual depreciation (straight-line) $160,000 Estimated annual manufacturing costs, excluding depreciation 16,000 7,500 Annual nonmanufacturing operating expenses and revenue are not expected to be affected by purchase of the new machine. Required: 1. Prepare a differential analysis as of November 30 comparing operations using the present machine (Alternative 1) with operations using the new machine (Alternative 2). The analysis should indicate the total differential profit that would result o 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 Costs: Purchase price Annual manufacturing costs (6 yrs.) Profit (loss) Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) Differential Effect (Alternative 2) 40,000 SA 000 000