Kim Kwon Digital ComponentsCompany assembles circuit boards by using a manually operated machine to insertelectronic components. The original cost of the machine is $60,000; theaccumulated depreciation is $24,000; 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 $180,000. 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

$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. 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.

1. Basedonly on the data presented, should the proposal be accepted?
2. Whatother factors should be considered before a final decision is made?

The paper should meet thefollowing requirements:

• Be2-4 pages in length, not counting the required title and reference pages.Your paper should include an introduction, a body with at least two fullydeveloped paragraphs, and a conclusion.
• Citationsshould adhere to APA style.

Textbook (ManagerialAccounting 13 edition, Warren, Reeve, Duchac).