Differersiat Analysit for Machioe Replacement Ridgeway Dig.tal Components Compaoy assembles circuit boaeds by using a manually operated machine to itisert electronic components. The onginal cost of the machine is $70,000, the accamulated deprecation is $28,000, its remaining useful lie is 5 years, and iss residuai value is negligible. On October 1 of the curreot year, a proposat was made to replace the present mantifacturing procedure with o fully automatic machine that has a purchase price or s145,600. The automatic machine has an estimated usehul ife of 5 years and no significant residual value. Foc use in evaluating the proposal, the managerial acosuntant acrumulated the following annual data on preverit and proposed operations: a. Prepare a differentral analyis dated October I to deteimine whether to continue wath (Alernative 1) or replace (Aternative 2) the oid machine. Prepare the analysis. over the utefu bfe of the new machine. If an amount is zero, enter " 0, U required, use a minus ayn to indicate a loss Continue with (Alt, 1) or Replace (Alt. 2) Old Machine a. For the continue and replace aitematives subtract the costs foom the revenues. Muliply the sales and costs for the 5 vear life. Deteimine the differential elfect on income of the reienues, costs, and income (less) by subtracting alternative 1 from alternative 2 . b. Based only an the data presented, should the preposal be accepted? c. Differences in capadity between the two alternativen is to consider before a finat cension is made