Topic: Final project ques) Assignments: SP18: INT/X , ?r, Connect Chegg Study |
ID: 2529189 • Letter: T
Question
Topic: Final project ques) Assignments: SP18: INT/X , ?r, Connect Chegg Study | Guided Sc Secure | https://n Chapter 12 Quiz Saved Help Save& Exit Submit 3 Saalfrank Corporation is considering two alternatives that are code-named M and N. Costs associated with the alternatives are listed below Supplies costs Assembly costs Power costs Inspection costs Alternative M $77,000 $49,008 $29,000 $42,000 Alternative N $68,000 $49,000 $44,000 $31,000 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? a. Supplies costs Assembly costs Power costs Inspection costs b. Differential cost Mc K Prev3 of 10 Next O Type here to search @ 5:00 PM ^ ? x 4/23/2018Explanation / Answer
A.)All cost are relevant except assembly cost. Because assembly cost is same in both alternative so it will not effect the management decision. Relevant cost are those cost which affects the result of management decision. Irrelevant cost are those cost which doesn't not affect the result of management decision or they are same in both alternatives. We can see clearly in the question assembly cost is same in both alternative so management will not consider this cost for decision making.
Supplies cost= Relevant cost
Assembly cost= Not relevant cost
Power cost= Relevant cost
Inspection cost= Relevant cost
B.) Differential cost is diffence between the cost of two alternatives decision.
Differential cost = Total of relevant cost under alternatives M - Total of relevant cost under alternatives N
Total relevant cost under M= supplies cost + power cost + inspection cost
$77000+ $ 29000+$42000= $ 148000
Total relevant cost under N. = Supplies cost+ power cost+ inspection cost
$68000+$44000+$31000= $143000
Differential cost=$148000 - $ 143000= $5000