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Performance Edge (PE) is a consulting firm that helps companies develop employee recognition programs. It maintains a large inventory of prizes companies can give
Performance Edge (PE) is a consulting firm that helps companies develop employee recognition programs. It maintains a large inventory of prizes companies can give to deserving employees. Because of growth in demand for its services, PE is considering selling its existing warehouse used for storing the prize inventory and leasing a new, larger warehouse facility. The existing warehouse has a large parking lot that was newly paved last year and PE rents about 30% of the parking spots to occupants of adjacent properties. The new warehouse is expected to be much more energy efficient and is larger than PE currently requires to store inventory. As a result, if they make the move management plans to sublet about 15% of the space for the next three years. The new warehouse is also expected to require less maintenance but because of the additional size two new warehouse employees will be hired. Required: Select each item in the following list as a differential cost, an opportunity cost, or a sunk cost in the decision to move into the new warehouse. If none of the categories apply for a particular item, select "None". The first item has been completed as an example: Item Ex. Cost of electricity for the warehouse 1. Sublet revenue for the new warehouse 2. Lease payments for the new warehouse 3. Net book value of the existing warehouse 4. Sales proceeds from selling the existing warehouse 5. Warehouse maintenance costs 6. Warehouse staff wages 7. Paving costs for the parking lot of the existing warehouse 8. Parking lot revenues for the existing warehouse Differential Cost
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