Question

Bogart Company is considering two alternatives. Alternative A will have revenues of $160,000 and costs of $100,000. Alternative B will have revenues of $180,000 and costs of $125,000. Compare Alternative A to Alternative B showing incremental revenues, costs, and net income. What is the net income increase or decrease if you chose Alternative B instead of Alternative A

Answer 1

Answer and Explanation:

The computation of the increase or decrease in the net income when Alternative B should be selected rather Alternative A is given below:

Particulars Alternative A Alternative B

Revenue $160,000 $180,000

Less cost -$100,000 $125,000

Net income $60,000 $55,000

If we choose alternative B so there would be decrease in the net income by $5,000