Question - Zurasky Corporation is considering two alternatives: A and B. Costs associated with the alternatives are listed below:
Materials costs (A) $35,000 (B)$51,000
Processing costs (A)$41,000 (B)$41,000
Equipment rental (A)$10,000 (B)$28,000
Occupancy costs (A)$19,000 (B)$29,000
1. Are the materials costs and processing costs relevant in the choice between alternatives A and B? (Ignore the equipment rental and occupancy costs in this question.)
Neither are relevant
Only processing costs are relevant
Only materials costs are relevant
Both are relevant
2. What is the differential cost of Alternative B over Alternative A, including all the relevant costs?