Differential Analysis Report for Machine Replacement Lone Wolf Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $93,000, the accumulated depreciation is $37,200, its remaining useful life is five years, and its residual value is zero. A proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $174,700. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on current and proposed operations: Current Operations Proposed Operations Sales $294,800 $294,800 Direct materials $100,400 $100,400 Direct labor 69,800 23,300 Power and maintenance 6,500 11,200 Taxes, insurance, etc. 2,300 7,700 Selling and administrative expenses 69,800 69,800 Total expenses $248,800 $212,400 a. Prepare a differential analysis report for the proposal to replace the machine. Include in the analysis both the net differential change in costs anticipated over the five years and the net annual differential change in costs anticipated. LONE WOLF TECHNOLOGIES Replace Machine Differential Analysis Report a. Prepare a differential analysis report for the proposal to replace the machine. Include in the analysis both the net differential change in costs anticipated over the five years and the net annual differential change in costs anticipated. LONE WOLF TECHNOLOGIES Replace Machine Differential Analysis Report Annual costs and expenses-present machine $ 248,800 Annual costs and expenses-new machine 212,400 Annual differential decrease in costs and expenses $ 36,400 X 5 Number of years applicable Total differential decrease in costs and expenses $ Cost of new machine 174,700 Net differential decrease in costs and expenses, five-year total $ Annual net differential decrease in costs and expenses-new machine $