Scholastic Tours is trying to decide which one of two tours it will introduce. The costs and revenues associated with each alternative are listed below: $\begin{array}{lcc}
&\text { Eastern Tour}&\text { Western Tour }\
\text { Projected revenue } & \$ 14,000 & \$ 18,000 \
\text { Variable costs } & 2,000 & 10,000\
\text { Fixed costs } & \underline{6,000 }&\underline{ 6,000} \
\text { Profit } &\underline{ \$ 6,000} &\underline{ \$ 2,000}
\end{array}$
What are the incremental (differential) costs of the Western Tour?

Question

Scholastic Tours is trying to decide which one of two tours it will introduce. The costs and revenues associated with each alternative are listed below: $\begin{array}{lcc}
&\text { Eastern Tour}&\text { Western Tour }\
\text { Projected revenue } & \$ 14,000 & \$ 18,000 \
\text { Variable costs } & 2,000 & 10,000\
\text { Fixed costs } & \underline{6,000 }&\underline{ 6,000} \
\text { Profit } &\underline{ \$ 6,000} &\underline{ \$ 2,000}
\end{array}$
 What are the incremental (differential) costs of the Western Tour?

Quizplus · Accepted Answer

The incremental costs of the Western Tour are the difference in variable costs between the Western and Eastern Tours, which is $10,000 - $2,000 = $8,000.

Scholastic Tours Is Trying to Decide Which One of Two