Warr22e_IM_TM_Ch25 - Transparency Master 25-1 DIFFERENTIAL...

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Transparency Master 25-1 DIFFERENTIAL ANALYSIS Summer Job Offers You have been offered two different jobs for the up- coming summer. Since both are full-time positions, you must choose to work one of the jobs. The first job is in an office. The pay will be $320 per week. The office is located 20 miles from your home, so you estimate that you will spend $12 per week on gas. You will also have to pay $25 per week for park- ing. Because you are required to dress professionally, you will need to purchase some new clothes. You es- timate that you will spend $350 on new clothes for this job during the summer. The second job is at an amusement park. The pay will be $220 per week. The amusement park is also 20 miles from your home, but you can carpool with a friend. Your share of the gas will be $6 per week. There is no charge for parking. The amusement park will furnish you with a uniform, so you won't need to buy any special clothes. Assuming that your summer break will allow you to work 12 weeks, which job will provide you with more money?
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Transparency Master 25-2 DIFFERENTIAL ANALYSIS Summer Job Offers Solution Differential revenue from alternatives: Revenue from office job ($320 × 12). ....... $3,840 Revenue from amusement park job ($220 × 12). ........................................ 2,640 Differential revenue from office job. . $1,200 Differential cost of alternatives: Gas—office job ($12 × 12). ........................ $144 Parking—office job ($25 × 12). ................. 300 Clothes—office job. ................................... 350 Total cost of office job. .......................... $ 794 Gas—amusement park job ($6 × 12). ...... 72 Differential cost of office job. ................ 722 Net advantage of office job. .......................... $ 478
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This note was uploaded on 04/20/2010 for the course BUSINESS Accounting taught by Professor Ebiohuche during the Spring '10 term at DeVry Manhattan.

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Warr22e_IM_TM_Ch25 - Transparency Master 25-1 DIFFERENTIAL...

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