Two alternatives, code-named X and Y, are under consideration at Afalava Corporation. Costs associated with the alternatives are listed below.
-What is the differential cost of Alternative Y over Alternative X,including all of the relevant costs?
A)$103,000
B)$39,000
C)$142,000
D)$122,500

Question

Two alternatives, code-named X and Y, are under consideration at Afalava Corporation. Costs associated with the alternatives are listed below. 
-What is the differential cost of Alternative Y over Alternative X,including all of the relevant costs?
A)$103,000 
B)$39,000 
C)$142,000 
D)$122,500

Quizplus · Accepted Answer

To calculate the differential cost of Alternative Y over Alternative X, we need to subtract the total cost of Alternative X from the total cost of Alternative Y. 
Total Cost of Alternative X = $357,500 + $50,000 = $407,500 
Total Cost of Alternative Y = $315,000 + $195,000 = $510,000 
Differential Cost = Total Cost of Alternative Y - Total Cost of Alternative X 
Differential Cost = $510,000 - $407,500 = $102,500 
Therefore, the differential cost of Alternative Y over Alternative X is $102,500. 
Since Alternative Y has a higher differential cost than Alternative X, it is not the best choice. The best choice would be Alternative X.

Two Alternatives, Code-Named X and Y, Are Under Consideration at Afalava