Alvarez Company is considering the following alternatives: $\begin{array}{lrr}&\text { Alternative A }&\text { Alternative B }\
\text { Revenues } & \$ 50,000 & \$ 60,000 \
\text { Variable costs } & 30,000 & 30,000 \
\text { Fixed costs } & 10,000 & 16,000
\end{array}$ What is the incremental profit?
A) $10,000
B) $0
C) $6,000
D) $4,000

Question

Quizplus · Accepted Answer

Incremental profit is calculated as the difference in revenues minus the difference in costs between the two alternatives. Incremental revenue is $60,000 - $50,000 = $10,000. Incremental costs are $30,000 (variable) + $16,000 (fixed) - $30,000 (variable) - $10,000 (fixed) = $6,000. Thus, incremental profit is $10,000 - $6,000 = $4,000.

Alvarez Company Is Considering the Following Alternatives What Is the Incremental Profit? A) $10,000 B) $0 C)

Alvarez Company Is Considering the Following Alternatives What Is the Incremental Profit?
A) $10,000
B) $0
C)