Flint tooling company is considering replacing a machine that has been used in its factory for two years. Relevant data associated with the operations of the old machine and the new machine, neither of which has any estimated residual value, are as follows:

Old Machine:

Cost of machine eight-year life $48,000

Annual depreciation(straight line) 6,000

Annual manufacturing cost, excluding depreciation 14,500

Annual nonmanufacturing operating expenses 2,900

Annual revenue 29,600

Current estimated selling price of the machine 18,000

New Machine:

Cost of machine, six-year life $58,500

Annual depreciation (straight-line) 9,750

Estimated annual manufacturing costs, exclusive of depreciation 5,200

Annual nonmanufacturing operating expenses and revenue are not expected to be affected by the purchase of the new machine.

1. Prepare a differential analysis report as of May 22, 2010, comparing operations utilizing the new machine with operations using the present equipment. The analysis should indicate the differential income that would result over the six year period if the new machine is acquired.

2. List other factors that should be considered before a final decision is reached.