Kat works for a consulting company in Houston. She needs to schedule a two-day visit to Chicago to meet a client. As a close friend of hers resides in Detroit, Kat plans to combine a weekend visit to Detroit to see her friend along with the Chicago trip. Kat's company will pay her roundtrip airfare and up to two nights' stay in a hotel (reimbursed at actual cost), and a daily allowance of $75 to cover other incidental expenses for the two days in Chicago. Kat is considering two options:
Option 1: Fly to Chicago early Thursday morning, hold discussions with her client on Thursday and Friday; rent a car and drive to Detroit Friday evening, drive back to Chicago in time to catch a return flight Sunday evening. Roundtrip fare to Chicago: $320, car rental to drive from Chicago to Detroit and back: $150, hotel stay for Thursday night in Chicago: $195, estimated expenses for food and incidentals for the full trip: $375.
Option 2: Fly to Detroit early Saturday morning and spend the weekend with her friend; rent a car and leave for Chicago Sunday night, hold discussions with her Chicago client on Monday and Tuesday, return the car at the Chicago airport and fly back to Houston late Tuesday evening. Onward airfare to Detroit and return airfare from Chicago: $350, Car rental to drive from Detroit to Chicago and drop-off at the Chicago airport: $225, Hotel stay for Sunday and Monday nights in Chicago: $390, Estimated expenses for food and incidentals for the full trip: $350.
Kat checked with her manager to make sure that her company had no objections if she flew into Detroit instead of Chicago. She also checked with her client to ensure that the client could accommodate either schedule. Kat wants to choose an option that minimizes the cost of her trip to her company.
Required:
a. Only considering monetary items, identify all the relevant costs that Kat should consider.
b. Again focusing on monetary items only, identify those costs that Kat expects to incur, but which are irrelevant for her decision.