Kim Kwon Digital Components Company assembles cirouit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $61,880, the accumulahed depreciation is $23,430, ts remaining useful life is five years, and its residul value is negigble. On May 4 of the ourrent year, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $180,720. The automatic machine has an estimated useful Iife of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on present and proposed operations Present Proposed OperationsOperations 2 Sales Direct materials 4 Direct lubor s Power and maintenance 6 Taxes, insurance,ete Seling and administrative experses 205,380.00 $205,380.00 72,26500 72,265.00 52,62500 5,230.00 1,365.00 45,445.00 17,75500 ,840.00 5,445.00 17693000 $141,285.00 Total expenses Labels Cash flows from investing activities Costs Revenues Amount Descriptions Direct labor (5 years) Direct materials (5 years) Gain on sale of investments Income (loss) Loss on sale of investments Power and maintenance (5 years) Purchase price Sales (5 years) Selling and administrative expenses (5 years) Taxes, insurance, etc. (5 years) Total costs Differential Analysis Continue with (Alternative 1) or Replace (Alternative 2) Old Machine May 4 Replace Old Machine Continue with Old Machine Differential Effect on Income Alternative 1) (Alternative 2) (Alternative 2) (Label) 5 (Label) 10 12