+1-415-670-9189
info@expertsmind.com
What other factors should considered before a final decision
Course:- Accounting Basics
Reference No.:- EM132082221




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Accounting Basics

Problem - Kim Kwon Digital Components Company assembles circuit boards by using a manually operated machine to insert electronic components. The original cost of the machine is $60,000; the accumulated depreciation is $24,000; its remaining life is five years; and its residual value is zero. On May 4 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 $180,000. 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 present and proposed operations:


Present
Operation

Proposed
Operation

Sales

$205,000

$205,000

Direct materials

$72,000

$72,000

Direct labor

$51,000

-

Power and maintenance

$5,000

$18,000

Taxes, insurance, etc.

$1,500

$4,000

Selling and administrative

$45,000

$45,000

Total expenses

$174,500

$139,000

1. Prepare a differential analysis dated May 4 to determine whether to continue with the old machine (Alternative 1), or replace it with the new machine (Alternative 2). Prepare the analysis over the useful life of the new machine.

2. Based only on the data presented, should the proposal be accepted?

3. What other factors should be considered before a final decision is made?

Your paper should meet the following requirements: Be 2-4 pages in length, not counting the required title and reference pages. Your paper should include an introduction, a body with at least two fully developed paragraphs, and a conclusion.




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
Koel corporation acquired all the voting stock of Rain company for $500,000 on January 1, 2005 when Rain had capital stock of $300,000 and retained earnings of $150,000.
Do you consider a job order cost accounting system appropriate for the clinic? - Identify as many factors as possible to lead you to conclude that it uses a job order system.
Analyze the foregoing tranactions using the following column headings. Insert the number of each transaction in the Item space, and insert the amounts in the appropriate colum
Open T- accounts for work in process inventory and Finished goods inventory . Post the appropriate entries to these accounts, identifying each entry by letter. Determine the
You are a consultant with Cox Consultancy. You have a client, Grace that has hired you to advise her on some production decisions relating to her chocolate business and comp
Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are: Depreciation Expense, Insurance Expense, Interest Pay
During 2013, an examination of the building by an engineering firm discloses that its estimated useful life is 15 years after 2012. What should be the amount of depreciation
Prepare dated journal entries for ABC Corporation in U.S. dollars for the incurrence and settlement of this foreign currency transaction.  ABC Corporation employs a two-tran