In 2020, the Allen Company had consulting revenues of $1,000,000, while operating costs were $750,000. In 2021, Allen will be introducing a new service that will generate $150,000 in sales revenues and $60,000 in operating costs.
-Assuming no changes are expected for the other services, the differential operating costs for 2021 will be:
A) $250,000.
B) $150,000.
C) $90,000.
D) $60,000.

Question

In 2020, the Allen Company had consulting revenues of $1,000,000, while operating costs were $750,000. In 2021, Allen will be introducing a new service that will generate $150,000 in sales revenues and $60,000 in operating costs. 
-Assuming no changes are expected for the other services, the differential operating costs for 2021 will be:
A) $250,000.
B) $150,000.
C) $90,000.
D) $60,000.

Quizplus · Accepted Answer

The differential operating costs for 2021 are the additional operating costs due to the new service, which is $60,000.

In 2020, the Allen Company Had Consulting Revenues of $1,000,000