Costs associated with two alternatives, code-named Q and R, being considered by

Question

Costs associated with two alternatives, code-named Q and R, being considered by Corniel Corporation are listed below:

Required: a. Which costs are relevant and which are not relevant in the choice between these two alternatives?

Supplies costs :Relevant/Not relevant

Power costs :Not relevant/Relevant

Inspection costs: Relevant/ Not relevant

Assembly costs :Not relevant /Relevant

b. What is the differential cost of Alternative R over Alternative Q? (Negative amount should be indicated by a minus sign. Omit the "$" signs in your response.) Differential cost ?

Explanation / Answer

a. Which costs are relevant and which are not relevant in the choice between these two alternatives

Particular Relevant/
Not relevant Reasond Supplies costs Relevant It is variable in nature and
costs differ between alternatives Power costs Not relevant Not relevant since the costsdo not differ Inspection costs Relevant It is variable in nature and
costs differ between alternatives Assembly costs Relevant It is variable in nature and
costs differ between alternatives

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