Indigo Industries is considering two new machines. Machine A will generate revenues of $120,000, have variable costs of $40,000, and fixed costs of $8,000. Machine B will generate revenues of $140,000, have variable costs of $30,000, and fixed costs of $8,000.

What is the incremental revenue?

A : $10,000

B : $30,000

C : $0

D : $20,000

The correct answer is B.

Explanation:

Giving the following information:

Indigo Industries is considering two new machines. Machine A will generate revenues of $120,000, have variable costs of $40,000, and fixed costs of $8,000. Machine B will generate revenues of $140,000, have variable costs of $30,000, and fixed costs of $8,000.

Machine A = 120,000 - 40,000 - 8,000 = 72,000

Machine B = 140,000 - 30,000 - 8,000 = 102,000

Incremental revenue = B - A = 30,000