Cullumber T Corporation is comparing two different options. Cullumber T currently uses Option 1, with revenues of $66,000 per year, maintenance expenses of $5,100 per year, and operating expenses of $26,500 per year. Option 2 provides revenues of $61,000 per year, maintenance expenses of $5,100 per year, and operating expenses of $22,400 per year. Option 1 employs a piece of equipment which was upgraded 2 years ago at a cost of $17,000. If Option 2 is chosen, it will free up resources that will bring in an additional $4,000 of revenue. Complete the following table to show the change in income from choosing Option 2 versus Option 1. Designate Sunk costs with an "S" otherwise select "NA". (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Option 1 Revenues $ Maintenance expenses Operating expenses Equipment upgrade Opportunity cost Option 2 Net Income Increase (Decrease) Sunk (S) $ $ +A $ > >
Cullumber T Corporation is comparing two different options. Cullumber T currently uses Option 1, with revenues of $66,000 per year, maintenance expenses of $5,100 per year, and operating expenses of $26,500 per year. Option 2 provides revenues of $61,000 per year, maintenance expenses of $5,100 per year, and operating expenses of $22,400 per year. Option 1 employs a piece of equipment which was upgraded 2 years ago at a cost of $17,000. If Option 2 is chosen, it will free up resources that will bring in an additional $4,000 of revenue. Complete the following table to show the change in income from choosing Option 2 versus Option 1. Designate Sunk costs with an "S" otherwise select "NA". (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Option 1 Revenues $ Maintenance expenses Operating expenses Equipment upgrade Opportunity cost Option 2 Net Income Increase (Decrease) Sunk (S) $ $ +A $ > >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Cullumber T Corporation is comparing two different options. Cullumber T currently uses Option 1, with revenues of $66,000 per year,
maintenance expenses of $5,100 per year, and operating expenses of $26,500 per year. Option 2 provides revenues of $61,000 per
year, maintenance expenses of $5,100 per year, and operating expenses of $22,400 per year. Option 1 employs a piece of equipment
which was upgraded 2 years ago at a cost of $17,000. If Option 2 is chosen, it will free up resources that will bring in an additional
$4,000 of revenue. Complete the following table to show the change in income from choosing Option 2 versus Option 1. Designate
Sunk costs with an "S" otherwise select "NA". (Enter negative amounts using either a negative sign preceding the number e.g. -45 or
parentheses e.g. (45).)
Option 1
Revenues
$
Maintenance
expenses
Operating
expenses
Equipment
upgrade
Opportunity
cost
Option 2
Net Income
Increase (Decrease)
Sunk (S)
$
$
+A
$
>
>
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