Costs associated with two alternatives, code-named 6 and 25, being considered by
ID: 2417568 • Letter: C
Question
Costs associated with two alternatives, code-named 6 and 25, being considered by Dodson Corporation are listed below:
Alternative 6 Alternative 25 Supplies costs $ 61,000 $ 56,000 Power costs $ 37,000 $ 37,000 Inspection costs $ 17,000 $ 26,000 Assembly costs $ 30,000 $ 25,000
Which costs are relevant and which are not relevant in the choice between these two alternatives?
Assembly costs
What is the differential cost of Alternative 6 over Alternative 25?
a.Which costs are relevant and which are not relevant in the choice between these two alternatives?
Explanation / Answer
Answer A:-
Supplies Cost : Relevant, since cost differs between alternatives.
Power Cost : Not relevant, since cost do not differ between alternatives.
Inspection Cost : Relevant, since cost differs between alternatives.
Assembly Cost : Relevant, since cost differs between alternatives.
B)
Alternative 6 Alternative 25 Differential Supplies Cost 61000 56000 -5000 Power Cost 37000 37000 0 Inspection Cost 17000 26000 9000 Assembly Cost 30000 25000 -5000 145000 144000 -1000