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    Relevant and Differential Costs

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    1. Saalfrank Corporation is considering two alternatives that are code-named M and N. Costs
    associated with the alternatives are listed below:

    Supplies costs 43000 43000
    Assembly costs 43000 56000
    Power costs 26000 26000
    Inspection costs 19000 26000

    Required:

    a. Which costs are relevant and which are not relevant in the choice between these two alternatives?

    b. What is the differential cost between the two alternatives? 

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    Solution Preview

    a. Which costs are relevant and which are not relevant in the choice between these two alternatives?

    Because the supplies costs and power costs are the same under either alternative, neither of ...

    Solution Summary

    The solution illustrates how to determine the relevant and differential costs to use in evaluating two projects.

    $2.19

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