Jimbob Company Has Two Business Alternatives - a & B

question 87

Multiple Choice

Jimbob Company has two business alternatives - A & B with different total annual costs as 72) set out below: $$\begin{array} { | l | l | l | } \hline \text { Total annual costs: } & A & B \\\hline \text { Advertising } & \$ 32,000 & \$ 31,000 \\\hline \text { Other marketing costs } & \$ 18,000 & \$ 12,000 \\\hline \text { Other expenses } & \$ 30,000 & \$ 35,000 \\\hline\end{array}$$ Additionally, if alternative B is chosen the business will have to use some space for its own purposes that are currently being rented to an outside business for $5,000 per year. What are the total differential costs between the two alternatives?

• A)$7,000.
• B)$5,000.
• C)$2,000.
• D)$3,000.

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