EXERCISE $1-5$ Differential, Sunk, and Opportunity Costs LO$1-5$

Northeast Hospital's Radiology Department is considering replacing an old inefficient X$-$ray machine with a state$-$of$-$the$-$art digital X$-$ray machine. The new machine would provide higher quality X$-$rays in less time and at a lower cost per X$-$ray. It also requires less power and would use a color laser printer to produce easily readable X$-$ray images. Instead of investing the funds in the new X$-$ray machine, the Laboratory Department is lobbying the hospital's management to buy a new DNA analyzer.

Required:

For each item below, indicate by placing an $x$ in the appropriate column whether it should be considered a differential cost, a sunk cost, or an opportunity cost in the decision to replace the old X$-$ray machine with a new machine. If none of the categories apply for a particular item, leave all columns blank.

Item

Differential Cost

Sunk Cost

Opportunity Cost

Ex$.$ Cost of $x-$ray film used in the old machine

Cost of the old X$-$ray machine

The salary of the head of the Radiology Department

The salary of the head of the Laboratory Department

Cost of the new color laser printer

Rent on the space occupied by Radiology

The cost of maintaining the old machine

Benefits from a new DNA analyzer

Cost of electricity to run the X$-$ray machines