Question

Indigo Industries is considering two new machines. Machine A will generate revenues of $120,000, have variable costs of $40,000, and fixed costs of $8,000. Machine B will generate revenues of $140,000, have variable costs of $30,000, and fixed costs of $8,000.
What is the incremental revenue?

A : $10,000
B : $30,000
C : $0
D : $20,000

Answer 1

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Indigo Industries is considering two new machines. Machine A will generate revenues of $120,000, have variable costs of $40,000, and fixed costs of $8,000. Machine B will generate revenues of $140,000, have variable costs of $30,000, and fixed costs of $8,000.

Machine A= 120,000 - 40,000 - 8,000= 72,000

Machine B= 140,000 - 30,000 - 8,000= 102,000

Incremental revenue= B - A= 30,000