QRC Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below: $\begin{array}{lrc}
&\text {Alternative A}&\text {Alternative B}\
\text { Projected revenue } & \$ 62,500& \$75,000 \
\text { Unit-level costs } & 12,500 & 18,000 \
\text { Batch-level costs } & 6,500 & 12,000 \
\text { Croduct-level costs } &7,500 & 8,500 \
\text { Tacility-level costs } & 5,000 & 6,250
\end{array}$ What is the differential revenue for this decision?

Question

QRC Company is trying to decide which one of two alternatives it will accept. The costs and revenues associated with each alternative are listed below: $\begin{array}{lrc}
&\text {Alternative A}&\text {Alternative  B}\
\text { Projected revenue } & \$ 62,500& \$75,000 \
\text { Unit-level costs } & 12,500 & 18,000 \
\text { Batch-level costs } & 6,500 & 12,000 \
\text { Croduct-level costs } &7,500 & 8,500 \
\text { Tacility-level costs } & 5,000 & 6,250
\end{array}$ What is the differential revenue for this decision?

Quizplus · Accepted Answer

The differential revenue is the difference between the revenue of alternative 1 and alternative 2, which is $525,000 - $512,500 = $12,500. Therefore, the best choice is to choose alternative 1 with a higher revenue.

QRC Company Is Trying to Decide Which One of Two