Question

C Qu. 21 Sea Island Company is trying to decide which... Sea Island Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below: Alternative A Alternative B Projected revenue $215,000 $310,000 Unit-level costs 41,000 52,000 Batch-level costs 28,500 40,000 Product-level costs 31,000 33,000 Facility-level costs 26,000 28,500 What is the differential revenue for this decision?

Answer 1

Answer:

The differential revenue for this decision is $95000

Explanation:

Differential Revenue: In differential revenue it shows a difference between two projects revenues. Irrespective of whatever information is given in the question.

It is computed to check that how much increment or decrements is done as compare to previous year, or between projects.

So,

Differential revenue = Alternative B Projected Revenue - Alternative A Projected Revenue

= $310,000 - $215,000

= $95,000

Hence, the differential revenue for this decision is $95000