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: Alternative A Alternative B Projected revenue $ 125,000 $ 150,000 Unit-level costs 25,000 36,000 Batch-level costs 12,500 24,000 Product-level costs 15,000 17,000 Facility-level costs 10,000 12,500 What is the differential revenue for this decision?

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Business

Lea

21 October, 23:42

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: Alternative A Alternative B Projected revenue $ 125,000 $ 150,000 Unit-level costs 25,000 36,000 Batch-level costs 12,500 24,000 Product-level costs 15,000 17,000 Facility-level costs 10,000 12,500 What is the differential revenue for this decision?

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Fernando Mcdonald · Answer 1

The differential revenue is equal to $25,000.

Explanation:

Differential revenue is the difference in revenue that may occur due to different course of actions.

Here, the projected revenue of Alternative A is $125,000.

And, the projected revenue of Alternative B is $150,000.

The differential revenue can be found by calculating the difference between these two.

Differential Revenue

=$150,000-$125,000

=$25,000

So, the differential revenue for this decision will be $25,000.