Saalfrank Corporation is considering two alternatives that are code-named M and N. Costs associated with the alternatives are listed below:

	Alternative M				Alternative N
Supplies costs	$	43,000			$	53,000
Assembly costs	$	43,000			$	56,000
Power costs	$	26,000			$	26,000
Inspection costs	$	19,000			$	26,000

Required:

a. Which costs are relevant and which are not relevant in the choice between these two alternatives?

b. What is the differential cost between the two alternatives?

The management of Wengel Corporation is considering dropping product B90D. Data from the company's accounting system appear below:

Sales	$720,000
Variable expenses	$374,000
Fixed manufacturing expenses	$245,000
Fixed selling and administrative expenses	$209,000

All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $173,000 of the fixed manufacturing expenses and $150,000 of the fixed selling and administrative expenses are avoidable if product B90D is discontinued.

Required:

What would be the financial advantage (disadvantage) of dropping B90D? Should the product be dropped? Show your work!