Kim Kwon Digital ComponentsCompany assembles circuit board

Kim Kwon Digital ComponentsCompany assembles circuit boards by using a manually operated machine to insertelectronic components. The original cost of the machine is $60000; theaccumulated depreciation is $24000; its remaining life is five years; and itsresidual value is zero. On May 4 of the current year a proposal was made toreplace the present manufacturing procedure with a fully automatic machine thathas a purchase price of $180000. The automatic machine has an estimated usefullife of five years and no significant residual value. For use in evaluating theproposal the accountant accumulated the following annual data on present andproposed operations: Present Operation Proposed Operation Sales $205000 $205000 Direct materials $72000 $72000 Direct labor $51000 – Power and maintenance $5000 $18000 Taxes insurance etc. $1500 $4000 Selling and administrative $45000 $45000 Total expenses $174500 $139000 1.Preparea differential analysis dated May 4 to determine whether to continue with theold machine (Alternative 1) or replace it with the new machine (Alternative2). Prepare the analysis over the useful life of the new machine. The paper should meet thefollowing requirements: Textbook (ManagerialAccounting 13 edition Warren Reeve Duchac).

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