Question

Zurasky Corporation is considering two alternatives: A and B. Costs associated with the alternatives are listed below: Alternative A Alternative B Materials costs $38,000 $48,000 Processing costs $44,000 $44,000 Equipment rental $10,600 $28,300 Occupancy costs $19,300 $29,600 What is the differential cost of Alternative B over Alternative A, including all of the relevant costs

Answer 1

$38,000

Step-by-step explanation:

Calculation for the differential cost of Alternative B over Alternative A,

Using this formula

Differential costs= Alternative A - Alternative B

Let plug in the formula

Alternative A Alternative B Differential Costs

Materials costs $38,000- $48,000=$10,000

Processing costs 44,000-44,000=0

Equipment rental 10,600- 28,300= 17,700

Occupancy costs 19,300-29,600=10,300

Total expenses$111,900- $149,900=$38,000

Therefore the differential cost will be $38,000