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zaharov [31]
3 years ago
8

Lone Wolf Technologies Inc. assembles circuit boards by using a manually operated machine to insert electronic components. The o

riginal cost of the machine is $60,400, the accumulated depreciation is $24,200, its remaining useful life is five years, and its residual value is zero. A proposal was made to replace the present manufacturing procedure with a fully automatic machine that will cost $113,800. The automatic machine has an estimated useful life of five years and no significant residual value. For use in evaluating the proposal, the accountant accumulated the following annual data on current and proposed operations: Current Operations Proposed OperationsSales $191,500 $191,500 Direct materials $65,200 $65,200 Direct labor 45,300 15,100 Power and maintenance 4,200 7,200 Taxes, insurance, etc. 1,500 5,000 Selling and administrative expenses 45,300 45,300 Total expenses $161,500 $137,800Required:Prepare a differential analysis report for the proposal to replace the machine. Include in the analysis both the net differential change in costs anticipated over the five years and the net annual differential change in costs anticipated.
Business
1 answer:
tigry1 [53]3 years ago
6 0

Answer:

Differential analysis for 1 year

                                        Keep old              Change              Differential

                                        machine               machine             amount

sales revenue                  191,000                191,000               0

depreciation expense     -4,840                  -22,760               -17,920

per year

direct materials                -65,200               -65,200               0

direct labor                       -45,300               -15,100                 30,200

power and                        -4,200                 -7,200                  -3,000

maintenance

taxes and                          -1,500                 -5,000                  -3,500

insurance

S&A expenses                  -45,300              -45,300                0

total                                   24,660               30,440                  5,780

If the new machine is purchased, profits will increase by $5,780 every year.

Differential analysis for 5 years

                                        Keep old              Change              Differential

                                        machine               machine             amount

sales revenue                  955,000              955,000             0

depreciation expense     -24,200               -113,800              -89,600

per year

direct materials                -326,000             -326,000            0

direct labor                       -226,500            -75,500               151,000

power and                        -21,000               -36,000               -15,000

maintenance

taxes and                          -7,500                -25,000               -17,500

insurance

S&A expenses                  -226,500           -226,500              0

total                                   123,300             152,200                28,900

If the new machine is purchased, profits will increase by $28,900 for the 5 year period.

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I tried the best I could.

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3 years ago
Given the following information about each economy, either calculate the missing variable or determine that it cannot be calcula
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Explanation:

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Fitz Company reports the following information.
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Answer and Explanation:

The preparation of the operating activities section is presented below:

Cash flows from operating activities

Net income  $374,000

Adjustments made  

Add: Depreciation  $44,000

add: Amortisation expanses  $7,200

Add: Accounts receivable decrease  $17,100

Add: Inventory decrease  $42,000

Less: Prepaid expense increase  -$4,700

Less: Accounts payable decrease  -$8,200

Add: Wages payable increases  $1,200

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Net cash provided by operating activities  $466,600

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