how do I plug in these numbers eqtires eight furnace hours, while Product L requ

Question

how do I plug in these numbers

eqtires eight furnace hours, while Product L requires five furnace most profitable product, assuming the furnace is a constraint ses EX 9-1 Differential analysis for a lease or sell decision Sure-Bilt Construction Company is value of $280,000 (original cost of $400,000 less accumulated depreciation of $120,000) for $276,000, less a 5% brokerage commission. Alternatively, the machinery can be leased for a total of $285,000 for five years, after which it is expected to have no residual value. During the period of the lease, Sure-Bilt Construction Company's costs of repairs, insur- ance, and property tax expenses are expected to be $25,500. a. Prepare a differential analysis, dated January 3, 2012, to determine whether Sure-Bilt considering selling excess machinery with a book ling, should lease (Alternative 1) or sell (Alternative 2) the machinery b.On the basi iata presented, would it be advisable to lease or sell the machinery? Explain. EX 9-2 Differential analysis for a lease or buy decision idaring new euioment, The equidment can be purchased from

Explanation / Answer

Part 1)

The completed table is provided as below:

____

Part 2)

It is advisable to sell the machinery. It is because the company will realize a loss of $2,700 if it leases the machinery.

Proposal to Lease or Sell Machinery January 3, 2010 Differential Revenues from Alternatives: Revenue from Lease 285,000 Proceeds from Sales 276,000 Differential Revenue from Lease (285,000 - 276,000) 9,000 Differential Cost of Alternatives: Repair, Insurance and Property Tax Expenses 25,500 Commission on Sale 13,800 Differential Cost of Lease (25,500 - 13,800) 11,700 Net Differential Income from Lease Operations (9,000 - 11,700) -$2,700

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