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: $$\begin{array} { l c c c }
& \text { Eastem Tour } & \text { Western Tour } \
\text { Projected revenue } & \$ 14,000 & \$ 18,000 \
\text { Variable costs } & 2,000 & 10,000 \
\text { Fixed costs } &\underline{ 6,000 }& \underline{6,000} \
\text { Profit } &\underline{ \$ 6,000} &\underline{ \$ 2,000}
\end{array}$$ 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: $$\begin{array} { l c c c } 
& \text { Eastem Tour } & \text { Western Tour } \
\text { Projected revenue } & \$ 14,000 &  \$ 18,000 \
\text { Variable costs } & 2,000 &  10,000 \
\text { Fixed costs } &\underline{ 6,000 }& \underline{6,000} \
\text { Profit } &\underline{ \$ 6,000} &\underline{  \$ 2,000}
\end{array}$$ What are the incremental (differential)costs of the Western Tour?

Quizplus · Accepted Answer

The incremental costs of the Western Tour are the additional variable costs compared to the Eastern Tour, which is $10,000 - $2,000 = $8,000.

Scholastic Tours Is Trying to Decide Which One of Two