Differential Analysis for Machine Replacement

the following annual data on present and proposed operations:

new machine. 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$.2)$

May $4$

Continue

with Old Replace Differential

Machine Old Machine Effects

$($Alternative $1)($Alternative $2)($Alternative $2)$

Revenues:

Sales $(5$ years$)$

Costs:

Purchase price

Direct materials $(5$ years$)$

Direct labor $(5$ years$)$

Power and maintenance $(5$ years$)$

Taxes, insurance, etc. $(5$ years$)$

Selling and admin. expenses $(5$ years$)$

Profit $($Loss$)$

b$.$ Based only on the data presented, should the proposal be accepted?

c$.$ Differences in capacity between the two alternatives is

to consider before a final decision is made.