Two alternatives, identified X and Y, are under consideration at Hayden Corporation. Costs associated with the alternatives are listed below.
$$\begin{array} { l r r }
& \text { Alternative X } & \text { Alternative Y } \
\text { Material costs } & \$ 44,000 & \$ 56,000 \
\text { Processing costs } & 37,000 & 59,000 \
\text { Building costs } & 14,000 & 14,000 \
\text { Equipment rental } & 11,000 & 11,000
\end{array}$$
-
What is the total differential costs of Alternative Y over Alternative X?
A) $140,000
B) $123,000
C) $34,000
D) $106,000

Question

Two alternatives, identified X and Y, are under consideration at Hayden Corporation. Costs associated with the alternatives are listed below.
$$\begin{array} { l r r } 
& \text { Alternative X } & \text { Alternative Y } \
\text { Material costs } & \$ 44,000 & \$ 56,000 \
\text { Processing costs } & 37,000 & 59,000 \
\text { Building costs } & 14,000 & 14,000 \
\text { Equipment rental } & 11,000 & 11,000
\end{array}$$
-
What is the total differential costs of Alternative Y over Alternative X?
A) $140,000
B) $123,000
C) $34,000
D) $106,000

Quizplus · Accepted Answer

The total differential costs are calculated by subtracting the total costs of Alternative X from Alternative Y. The differential costs are: Material costs ($56,000 - $44,000) + Processing costs ($59,000 - $37,000) = $12,000 + $22,000 = $34,000. Building costs and Equipment rental are the same for both alternatives, so they do not affect the differential cost.

Two Alternatives, Identified X and Y, Are Under Consideration at Hayden