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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 $$87,700,$ the accumulated depreciation is $$35,100,$ its remaining useful life is $5$ 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 $$182,400.$ The automatic machine has an estimated useful life of $5$ 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:

Present

Proposed

Operations Operations

$\backslash$table$[[$Sales$,$$$278,000,$$$278,000$