Innovative Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $77,300, the accumulated depreciation is $30,900, 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 $145,400. 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: Line Item Description Current Operations Proposed Operations Sales $245,000 $245,000 Direct materials $83,500 $83,500 Direct labor 58,000 19,300 Power and maintenance 5,400 9,300 Taxes, insurance, etc. 1,900 6,400 Selling and administrative expenses 58,000 58,000 Total expenses $206,800 $176,500