Practice differential analysis kim kwon digital components

Assignment Help Managerial Accounting

Reference no: EM13877492

Practice Differential Analysis

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

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

Reference no: EM13877492

Questions Cloud

Calculate the expected profit for each wine : Calculate, the expected demand and the standard deviation of the demand for each wine and calculate the expected profit for each wine.

Explain structures of the brain and each structure function : Write a 700- to 1050-word paper in APA format describing the five major structures of the brain and each structure's function(s) in the human body

Find combination of price : A noncompetitive firm faces the following demand function for its product P = 2400 - 16 Q + 12 , Find the combination of price and quantity that maximizes the firm's revenue.

Calculate atomic packing : The unit cell for Cr2O3 has hexagonal symmetry with lattice parameters a = 0.4961 nm and c = 1.360 nm. If the density of this material is 5.22 g/cm3, calculate its atomic packing factor.

Practice differential analysis kim kwon digital components : Practice Differential Analysis 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; it..

Processing first begins in the boiling department : Processing first begins in the Boiling department. After boiling of all the materials have been completed, the product is transferred to Cooling department. In the Cooling department, further materials are added when processing is 25% complete (all t..

Response - blooms taxonomy : Read your peers' discussion posts and respond to at least two of them. What insights can you share regarding additional uses of Bloom's Taxonomy or other critical thinking skills and strategies related to your peers' interests in psychology

What price does each passenger pays : A cruise line offers a one week tour of Alaska for $2,400 per person. If more than 200 passengers join the tour, the price is reduced by $3 per additional pas- senger. The tour can accommodate 1000 passengers. What number of passengers maximizes t..

Whats the current yield and yield to maturity : Find the current yield of a 5.65 percent, 8-year bond that's currently priced in the market at $853.75. Now, use a financial calculator to find the yield to maturity on this bond (use annual compounding).

User Account

All Pages