Costs associated with two alternatives, code-named Q and R, being considered by
ID: 2522199 • Letter: C
Question
Costs associated with two alternatives, code-named Q and R, being considered by Albiston Corporation are listed below:
Required:
a. Which costs are relevant and which are not relevant in the choice between these two alternatives?
b. What is the differential cost between the two alternatives?
Costs associated with two alternatives, code-named Q and R, being considered by Albiston Corporation are listed below:
Required:
a. Which costs are relevant and which are not relevant in the choice between these two alternatives?
b. What is the differential cost between the two alternatives?
Alternative Q Alternative R Supplies costs $ 94,000 $ 94,000 Power costs $ 65,000 $ 64,100 Inspection costs $ 51,000 $ 64,100 Assembly costs $ 59,000 $ 59,000Explanation / Answer
a Supplies costs Not relevant Power costs Relevant Inspection costs Relevant Assembly costs Not relevant b Alternative Q Alternative R Differential Supplies costs 94000 94000 0 Power costs 65000 64100 -900 Inspection costs 51000 64100 13100 Assembly costs 59000 59000 0 Total costs 269000 281200 12200 Differential cost = $12200