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

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

Quizplus · Accepted Answer

The incremental costs of the Western Tour are the difference in variable costs, which is $10,000 - $2,000 = $8,000. Fixed costs are the same for both tours and do not contribute to the incremental costs.

Scholastic Tours Is Trying to Decide Which One of Two