Cardon, Inc. is considering two options, X and Y. Costs associated with each option are listed...
Cardon, Inc. is considering two options, X and Y. Costs associated with each option are listed below:
| Option X | Option Y | ||||||
| Supplies costs | $ | 74,000 | $ | 74,000 | |||
| Power costs | $ | 34,200 | $ | 33,400 | |||
| Inspection costs | $ | 27,000 | $ | 33,400 | |||
| Assembly costs | $ | 39,000 | $ | 39,000 | |||
a. Which costs are relevant and which are not relevant in the choice between these two options?
b. What is the differential cost between the two options?
a.Supplies costs
Power costs
Inspection costs
Assembly costs
Differential cost
Homework Answers
Ans:
|
a. |
Supplies Cost |
Not Relevant |
|
Power Costs |
Relevant |
|
|
Inspection costs |
Relevant |
|
|
Assembly costs |
Not Relevant |
|
|
b. |
Differential cost (34200+27000 - 33400-33400) |
$5600 |
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