Profit as per desk $3.85 using differential analysis.
Differential analysis- Differential analysis is a decision-making technique that compares the net results of two options by examining the benefits and costs associated with each. The option chosen has the most favorable (or least unfavorable) financial impact.
For example, a revenue differential of $1,000,000 indicates that Alternative 1 generates $1,000,000 more revenue than Alternative 2. The $750,000 difference in variable costs indicates that variable costs are $750,000 higher for Alternative 1 than for Alternative 2.
Managers must be able to perform differential analysis, which focuses on identifying the costs and benefits that differ between alternatives, in order to be successful in decision making.
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