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6 June, 11:05

Ouzts Corporation is considering Alternative A and Alternative B. Costs associated with the alternatives are listed below:

Alternative A Alternative B

Materials costs

$ 40,000 $ 56,000

Processing costs

$ 37,000 $ 37,000

Equipment rental

$ 13,000 $ 13,000

Occupancy costs

$ 15,000 $ 22,000

What is the financial advantage (disadvantage) of Alternative B over Alternative A?

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Answers (1)
  1. 6 June, 11:09
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    Answer: Disadvantage of $23000

    Explanation:

    Costs associated with Alternative A:

    40000+37000+13000+15000

    Total cost = $105000

    Cost associated with Alternative B:

    56000+37000+13000+22000

    Total cost = $128000

    To find the advantage/disadvantage we have to find the difference in the costs: 105000 - 128000

    Disadvantage of $23000
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