A company is considering replacing an old piece of machinery, which cost $597,600 and has $351,400 of accumulated depreciation to date, with a new machine that has a purchase price of $483,600. The old machine could be sold for $64,900. The annual variable production costs associated with the old machine are estimated to be $157,400 per year for eight years. The annual variable production costs for the new machine are estimated to be $99,300 per year for eight years. Required:
a. Prepare a differential analysis dated April 29 to determine whether to continue with (Alternative 1) or replace (Alternative 2) the old machine.
b. What is the sunk cost in this situation?

Costco wholesale corporation operates membership warehouses selling food, appliances, consumer electronics, apparel and other household goods at 471 locations across the u. s. as well as in canada, mexico and puerto rico. as of its fiscal year-end 2005, costco had approximately 21.2 million members. selected fiscal-year information from the company's balance sheets follows. ($ millions). selected balance sheet data 2005 2004 merchandise inventories $4,015 $3,644 deferred membership income (liability) 501 454 (a) during fiscal 2005, costco collected $1,120 cash for membership fees. use the financial statement effectstemplate to record the cash collected for membership fees. (b) in 2005, costco recorded $46,347 million in merchandise costs (that is, cost of goods sold). record thistransaction in the financial statement effects template. (c) determine the value of merchandise that costco purchased during fiscal-year 2005. use the financial statementeffects template to record these merchandise purchases. assume all of costco's purchases are on credit.