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Ayayai Corporation is comparing two different options

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Ayayai Corporation is comparing two different options. Ayayai currently uses Option 1, with revenues of $78,000 per year, maintenance expenses of $6,000 per year, and operating expenses of $31,200 per year. Option 2 provides revenues of $72,000 per year, maintenance expenses of $6,000 per year, and operating expenses of $26,400 per year. Option 1 employs a piece of equipment which was upgraded 2 years ago at a cost of $20,000. If Option 2 is chosen, it will free up resources that will bring in an additional $5,000 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" otherwise select "NA". (If amount decreases net income then enter the amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

 

 

 

Option 1

 

Option 2

 

Net Income

Increase (Decrease)

Sunk (S)Revenues

$

enter a dollar amount

 

 

$

enter a dollar amount

 

 

$

enter a dollar amount

 

 

select an option

 

 

Maintenance expenses

 

enter a dollar amount

 

 

enter a dollar amount

 

 

enter a dollar amount

 

 

select an option

 

Operating expenses

 

enter a dollar amount

 

 

enter a dollar amount

 

 

enter a dollar amount

 

 

select an option

 

Equipment upgrade

 

enter a dollar amount

 

 

enter a dollar amount

 

 

enter a dollar amount

 

 

select an option

 

Opportunity cost

 

enter a dollar amount

 

 

enter a dollar amount

 

 

enter a dollar amount

 

 

select an option

 

 

 

 

 

 

 

 

$

enter a total amount for this column