EE 25-4 p 1216 PE 25-48 Replace equipment OBJ. 1 A machine with a book value of $62,400 has an estimated 5-year life. A proposal is offered to sell the old machine for $39,400 and replace it with a new machine at a cost of $58,500.ential Analysis, Product Pricing, and Activity-Based Costing 1249 The new machine has a 5-year life with no residual value. The new machine would reduce annual direct labor costs from $8,700 to $5,900. Prepare a differential analysis dated April 11 on whether to Continue with Old Machine (Alternative 1) or Replace Old Machine (Alternative 2).PE 25-3B Make or buy OBJ. 1 A company manufactures various sized plastic bottles for its medicinal product. The manufacturing cost for small bottles is $56 per unit (100 bottles), including fixed costs of $18 per unit. A proposal is offered to purchase small bottles from an outside source for $29 per unit, plus $4 per unit for freight. Prepare a differential analysis dated March 30 to determine whether the company should Make Bottles (Alternative 1) or Buy Bottles (Alternative 2), assuming that fixed costs are unaffected by the decision