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Current Designs faces a number of important decisions that require incremental analysis.

Current Designs is always working to identify ways to increase efficiency while becoming more environmentally conscious. During a recent brainstorming session, one employee suggested to Diane Buswell, controller, that the company should consider replacing the current rotomold oven as a way to realize savings from reduced energy consumption. The oven operates on natural gas, using $13,600$ therms of natural gas for an entire year. A new, energy$-$efficient rotomold oven would operate on $12,000$ therms of natural gas for an entire year. After seeking out price quotes from a few suppliers, Diane determined that it would cost approximately $\backslash (\backslash$$ $200,000\backslash )$ to purchase a new, energy$-$efficient rotomold oven. She determines that the expected useful life of the new oven would be $10$ years, and it would have no salvage value at the end of its useful life. Current Designs would be able to sell the current oven today for $\backslash (\backslash$$ $8,000\backslash ).$ Otherwise, its remaining useful life is estimated at $10$ years with a zero salvage value.

$($a$)$

Prepare an incremental analysis to determine if Current Designs should purchase the new rotomold oven, assuming that the average price for natural gas over the next $10$ years will be $\backslash (\backslash$$ $0\mathrm{.}70\backslash )$ per therm. $($Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, e$.$g$.\backslash (-15,000\backslash )$ or $(15,000).)$

Using multiple attempts will impact your score.

$\backslash (10\backslash \%\backslash )$ score reduction after attempt $2($b$)$

Diane is concerned that natural gas prices might increase at a faster rate over the next $10$ years. If the company projects that the average natural gas price of the next $10$ years could be as high as $\backslash (\backslash$$ $0\mathrm{.}80\backslash )$ per therm, discuss how that might change your conclusion in $($a$).($Enter decrease in net income then enter with a negative sign preceding the number or parenthesis, e$.$g$.\backslash (-15,000\backslash )$ or $(15,000).)$

Variable manufacturing

costs

Attempts: $0$ of $3$ used

Using multiple attempts will impact your score.

$\backslash (10\backslash \%\backslash )$ score reduction after attempt $2$

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