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Machine replacement decision

Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $600,000 and has $352,700 of accumulated depreciation to date, with a new machine that has a purchase price of $485,800. The old machine could be sold for $62,400. The annual variable production costs associated with the old machine are estimated to be $156,000 per year for 8 years. The annual variable production costs for the new machine are estimated to be $99,600 per year for 8 years. a.1 Prepare a differential analysis dated December 10 to determine whether to continue with (Alternative 1 ) or replace (Alternative 2 ) the old machine. If an amount is zero, enter " 0 ". If required, use a minus sign to indicate a loss. a.2 Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. b. What is the sunk cost in this situation? The sunk cost is \$ Machine Replacement Decision A company is considering replacing an old piece of machinery, which cost $600,000 and has $352,700 of accumulated depreciation to date, with a new machine that has a purchase price of $485,800. The old machine could be sold for $62,400. The annual variable production costs associated with the old machine are estimated to be $156,000 per year for 8 years. The annual variable production costs for the new machine are estimated to be $99,600 per year for 8 years. a.1 Prepare a differential analysis dated December 10 to determine whether to continue with (Alternative 1 ) or replace (Alternative 2 ) the old machine. If an amount is zero, enter " 0 ". If required, use a minus sign to indicate a loss. a.2 Determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine. b. What is the sunk cost in this situation? The sunk cost is \$

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