Reference no: EM132193340

Question - Dogfish Corp. is comparing two different options. The company currently follows Option 1, with revenues of $700,000 per year, maintenance expenses of $3,000 per year, and operating expenses of $35,000 per year. Option 2 provides revenues of $700,000 per year, maintenance expenses of $12,000 per year, and operating expenses of $30,000 per year. Option 1 uses technology that was purchased last year for a cost $5000. If option 2 is chosen, it will free up resources that will increase revenues by $3000. Complete the table comparing Option 1 versus Option 2 and designate sunk costs with an "S".

What is the net increase or decrease and which option should they choose?