Question

Ouzts Corporation is considering Alternative A and Alternative B. Costs associated with the alternatives are listed below:Materials costs $44,000 $60,800Processing costs $40,600 $40,600Equipment rental $14,200 $14,200Occupancy costs $16,300 $24,000What is the financial advantage (disadvantage) of Alternative B over Alternative A?Multiple Choicea. $115,100b. $(24,500)c. $139,600d. $127,350

Answer 1

Answer:

$(24,500)

Explanation:

Considering Alternative A

Given the following associated cost;

Materials costs = $44,000

Processing costs = $40,600

Equipment rental = $14,200

Occupancy costs = $16,300

Total cost = $44,000 + $40,600 +  $14,200 + $16,300

                 = $115,100

Considering Alternative B

Given the following associated cost;

Materials costs = $60,800

Processing costs = $40,600

Equipment rental = $14,200

Occupancy costs = $24,000

Total cost = $60,800 + $40,600 +  $14,200 + $24,000

                 = $139,600

Financial advantage (disadvantage) of Alternative B over Alternative A

= $115,100 - $139,600

= $(24,500)