Rafael SA is comparing two different options. Nathan T currently uses Option 1, with revenues of 65,000
Question:
Rafael SA is comparing two different options. Nathan T currently uses Option 1, with revenues of €65,000 per year, maintenance expenses of €5,000 per year, and operating expenses of €26,000 per year. Option 2 provides revenues of €60,000 per year, maintenance expenses of €5,000 per year, and operating expenses of €22,000 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.”
Step by Step Answer:
Accounting Principles
ISBN: 978-1119419617
IFRS global edition
Authors: Paul D Kimmel, Donald E Kieso Jerry J Weygandt