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Current Designs faces a number of important decisions that require incremental analysis.

Current Designs is always working to identify ways to increase efficiency while becoming more environmentally conscious. During a recent brainstorming session, one employee suggested to Diane Buswell, controller, that the company should consider replacing the current rotomold oven as a way to realize savings from reduced energy consumption. The oven operates on natural gas, using $18,700$ therms of natural gas for an entire year. A new, energy$-$efficient rotomold oven would operate on $16,500$ therms of natural gas for an entire year. After seeking Sut price quotes from a few suppliers, Diane determined that it would cost approximately $$275,000$ to purchase a new, energy$-$efficient rotomold oven. She determines that the expected useful life of the new oven would be $10$ years, and it would have no salvage value at the end of its useful life. Current Designs would be able to sell the current oven today for $$11,000.$ Otherwise, its remaining useful life is estimated at $10$ years with a zero salvage value.

$($a$)$

Prepare an incremental analysis to determine if Current Designs should purchase the new rotomold oven, assuming that the average price for natural gas over the next $10$ years will be $$0\mathrm{.}70$ per therm. $($Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, e$.$g$.-15,000$ or $(15,000).)$

Retain

Oven

Replace

Oven

Net Income

Increase $($Decrease$)$

Variable manufacturing costs

New oven cost

Proceeds from scrapping old oven

Total

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