Alvarez Company Is Considering the Following Alternatives What Is the Incremental Profit?
A)$10,000
B)$0
C)$6,000
D)$4,000

question 164

Multiple Choice

Alvarez Company is considering the following alternatives: $$\begin{array} { l c c } & \text { Alternative A } & \text { Alternative B } \\\hline \text { Revenues } & \$ 50,000 & \$ 60,000 \\\text { Variable costs } & 30,000 & 30,000 \\\text { Fixed costs } & 10,000 & 16,000\end{array}$$ What is the incremental profit?

• A)$10,000
• B)$0
• C)$6,000
• D)$4,000

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Definitions:

Sacrificed Output

The production or output that is given up as a consequence of choosing one option over another, often discussed in opportunity cost analysis.

Tax

A compulsory financial charge or other levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Net Value

Net value is the difference between the total assets and total liabilities of a company or individual, indicating the actual worth.

Excise Tax

A type of tax charged on goods and services produced within a country, often imposed on specific items like tobacco and alcohol.