Question

The costs and revenues associated with two alternatives are listed below: Alternative 1 Alternative 2 Projected revenue $ 100,000 $ 125,000 Unit-level costs 20,000 30,000 Batch-level costs 20,000 25,000 Product-level costs 15,000 15,000 Facility-level costs 10,000 10,000 Which alternative should be selected based on this information

Answer 1

Answer:

Alternative 2

Explanation:

Calculation to determine Which alternative should be selected based on this information

Item Alt. 1 Alt. 2

Alt. 1 Alt. 2

Projected revenue $100,000 $125,000

Unit-level costs (20,000) (30,000)

Batch-level costs (20,000) (25,000)

Product-level costs (15,000) (15,000)

Facility-level costs (10,000) (10,000)

Profit $ 35,000 $ 45,000

Thereforer Based on the above calculation the alternative that should be selected based on this information will be ALTERNATIVE 2 because it has a higher profit of the amount of $45,000