Question

Two alternatives, identified X and Y, are under consideration at Hayden Corporation. Costs associated with the alternatives are listed below.

Alternative X Alternative YMaterial costs$40,500 $55,000 Processing costs 35,500 59,000 Building costs 14,200 14,200 Equipment rental 11,200 11,200
What is the total differential costs of Alternative Y over Alternative X?
A) $14,500
B) $23,500
C) $38,000
D) $0

Answer 1

The total differential cost of Alternative Y over Alternative X at Hayden Corporation is the sum of the differences in each cost category. After comparing each category, the total differential cost is determined to be $38,000.

Step-by-step explanation:

The total differential costs of Alternative Y over Alternative X is calculated by subtracting the costs associated with Alternative X from the costs associated with Alternative Y. To find the total differential cost, you need to look at the differences in material costs, processing costs, building costs, and equipment rental costs separately. After calculating the difference for each category, you add them together to get the total differential cost.

Add up all the differences: $14,500 (material) + $23,500 (processing) + $0 (building) + $0 (equipment rental) = $38,000. Therefore, the total differential cost of Alternative Y over Alternative X is $38,000.