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Compute the differential costs between the two plan

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Reference no: EM132803797

Question - Abba Company is evaluating two alternative plans to produce its major product line. Following are the expected production costs under the two plans:

Plan 1 Plan 2

Variable costs:

Materials 5.00 5.25

Labor 7.00 6.50

Factory overhead 3.00 3.00

Fixed costs:

Depreciation P10,000 P10,000

Maintenance 5,000 6,000

Insurance 2,500 3,000

Rent 3,000 3,000

Required -

a. Identify the relevant cost items

b. Assuming that both plants call for the production of 10,000 units of the poduct, compute the differential costs between the two plan?

Reference no: EM132803797

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