Obj. 1, 2 P12-2 Differential analysis report for machine replacement proposal Catalina Tooling Company is considering replacing a machine that has been used in its fae. tory 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, 10-year life Annual depreciation (straight-line) Annual manufacturing costs, excluding depreciation Annual nonmanufacturing operating expenses Annual revenue Current estimated selling price of the machine New Machine Cost of machine, 8-year life Annual depreciation (straight-line) Annual manufacturing costs, excluding depreciation Annual nonmanufacturing operating expenses $75,000 7,500 33,150 10,000 60,000 24,000 $90,000 11,250 18,200 10,000 Chapter 12 Differential Analysis and Product Pricing Annual nonmanufacturing operating expenses and revenue are not expected to be affected by the purchase of the new machine. Instructions 1. Prepare a differential analysis report comparing operations utilizing the new machine with operations using the old machine. The analysis should indicate the differential income that would result over the eight-year period if the new machine is acquired. 2. List other factors that should be considered before a final decision is reached