Question

Two alternatives, code-named X and Y, are under consideration at Guyer Corporation. Costs associated with the alternatives are listed below. Alternative X Alternative Y Materials costs $ 44,000 $ 63,800 Processing costs $ 48,300 $ 48,300 Equipment rental $ 18,000 $ 18,000 Occupancy costs $ 17,200 $ 25,500 What is the financial advantage (disadvantage) of Alternative Y over Alternative X

Answer 1

The financial disadvantage that alternative Y over X is $28,100

Step-by-step explanation:

The variables given were all costs relating to each alternative,hence the financial advantage that one could have over the other is that it is less costly.

In the same vein,the financial disadvantage that one alternative could have over the other is that it has incurred more costs compared to the other alternative.

Total costs of Alternative X=$44,000+$48,300+$18,000+$17,200

=$127,500

Total costs of alternative Y=$63,800+$48,300+$18,000+$25,500

=$155,600

financial disadvantage of Y over X=$127,500-$155,600=-$28,100