Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $601,300 and has $347,000 of accumulated depreciation to date, with a new machine that has a purchase price of $485,700. The old machine could be sold for $61,600. The annual variable production costs associated with the old machine are estimated to be $155,800 per year for 8 years. The annual variable production costs for the new machine are estimated to be $100,400 per year for 8 years. a.1 Prepare a differential analysis dated December 10 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. If an amount is zero, enter "0". If required, use a minus sign to indicate a loss. Differential Analysis Continue with (Alt. 1) or Replace (Alt. 2) Old Machine December 10 Costs: Line Item Description Revenues: Proceeds from sale of old machine Purchase price Variable productions costs (8 years) Profit (loss) Continue with Old Machine (Alternative 1) Replace Old Machine (Alternative 2) b. What is the sunk cost in this situation? The sunk cost is s Differential Effects (Alternative 2) a.2 Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Next

Machine Rastacament Deakifen machine ara stemated ed le $100,400 por yoar for 11 year. to indecutw a ledk. b. What in the nupk ecet in this ituabon? the aunkront is