Question: Ridgeway Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $85,800,


Ridgeway Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $85,800, the accumulated depreciation is $34,300, its remaining useful life is 5 years, and its residual value is negligible, On October 1 of the current year, a proposar was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $178,500. The automatic machine has an estimated useful life of 5 years and no significant residual value. For use in evaluating the proposal, the managerial accountant accumulated the fellawing annual data on present and proposed operations: a. Prepare a differential analysis dated October 1 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. Prepare the analysis over the useful lfe of the new machine, If an amount is zero, enter " 0. If required, use a minus sign to indicate a loss. b. Based only on the data presented, should the proposal be accepted? b. Based only on the data presented, should the proposal be accepted? c. Differences in capacity between the two alternatives is to consider before a final decision is made
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
