5.00 points Nicklin Corporation is considering two alternatives, code-named M an

Question

5.00 points Nicklin Corporation is considering two alternatives, code-named M and N. Costs associated with the alternatives are listed below Supplies costs Power costs Inspection costs $ 22,000 33,500 Assembly costs $ 35,000 24,000 Atermative M Altermative N 42,00042,000 $ 69,000 $ 61,000 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 Altemative M and Alternative N? (Negative amount should be indicated by a minus sign.) 0 Type here to search

Explanation / Answer

A.

Supplies cost= relevant, since costs differ between alternatives

Power costs= not relevant, since the costs do not differ between alternatives.

Inspection costs= relevant, since costs differ between alternatives

Assembly costs= relevant, since costs differ between alternatives

B.

Alternative M Alternative N Differential Supplies costs $69,000 $61,000 (8,000) Power costs $42,000 $42,000 0 Inspection costs $22,000 $33,500 $11,500 Assembly costs $35,000 $24,000 (11,000) Total $168,000 $160,500 (7,500)

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