17. A commercial oven with a book value of $19,390 has an estimated remaining 5...
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Accounting
17. A commercial oven with a book value of $19,390 has an estimated remaining 5 year life. A proposal is offered to sell the oven for $6,060 and replace it with a new oven costing $34,640. The new machine has a 5-year life with no residual value. The new machine would reduce annual maintenance costs by $6,660.
Provide a differential analysis on the proposal to replace the commercial oven.
Annual maintenance cost reduction
$
Number of years applicable
Total differential decrease in cost
$
Proceeds from sale of equipment
$
Cost of new equipment
Net differential decrease in cost from replacing equipment
$
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