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Zurasky Corporation is considering two alternatives: A and B. Costs associated with the alternatives are listed below:
Materials costs (A) $35,000 (B)$51,000Processing costs (A)$41,000 (B)$41,000Equipment rental (A)$10,000 (B)$28,000Occupancy 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 relevantOnly processing costs are relevantOnly materials costs are relevantBoth are relevant
2. What is the differential cost of Alternative B over Alternative A, including all the relevant costs?
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Conan Industries also paid $71,411 for expenses in 2010. Of the amount paid, $33,331 was for expenses incurred on account in 2009. In addition, Conan incurred $42,259 of expenses in 2010, which will not be paid until 2011.
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