Ridgeway Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $$85,000,$ the accumulated depreciation is $$34,000,$ its remaining useful life is $5$ years, and its residual value is negligible. On October $1$ of the current year, a proposal was made to replace the present manufacturing procedure with a fully automatic machine that has a purchase price of $$176,800.$ 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 following annual data on present and proposed operations:

Line Item Description Present

Operations Proposed

Operations

Sales $$269,500$ $$269,500$

Direct materials $$91,800$ $$91,800$

Direct labor $63,800$

Power and maintenance $6,00031,500$

Taxes, insurance, etc. $2,1007,100$

Selling and administrative expenses $63,80063,800$

Total expenses $$227,500$ $$194,200$

Question Content Area

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 life of the new machine. If an amount is zero, enter $"0".$ If required, use a minus sign to indicate a loss.