Differential Analysis for Machine Replacement

Ridgeway Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $$200,000,$ the accumulated depreciation is $$50,000,$ its remaining useful life is $6$ years, and its residual value is negligible. On October $1$ of the current year, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $$500,000.$ The automatic machine has an estimated useful life of $6$ years and no significant residual value. For use in evaluating the proposal, the managerial accountant accumulated the following annual data on present and proposed operations:

$\backslash$table$[[,\backslash$table$[[$Present$],[$Operations$]],\backslash$table$[[$Proposed$],[$Operations$]]],[$Sales$,$$$400,000,$$$400,000$