Nicklin Corporation is considering two alternatives, code-named M and N. Costs a

Question

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

Nicklin Corporation is considering two alternatives, code-named M and N. Costs associated with the alternatives are listed below: Alternative N Alternative M $62,000 Supplies costs Power costs $59,000 40,000 40,000 $ 30,500 n costs $ 20,000 Assembly costs 33,000 22,000 Required: a. Which costs are relevant and which are not relevant in the choice between these two alternatives? Supplies costs_ Power costs Inspection costs Assembly costs b. What is the differential cost between Alternative M and Alternative N? (Negative amount should be indicated by a minus sign.) Differential cost

Explanation / Answer

a) determine relevant and not relevant cost

b) Differential cost = 3500

Supplies cost Relevant Power cost Not Relevant Inspection cost Relevant Assembly cost Relevant

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