EXERCISE 2-7 DIFFERENTAIL, OPPORTUNITY ,AND SUNK

Northwest Hospital is a full-service hospital that provides everything from major surgery
and emergency room care to outpatient clinics.The hospital’s Radiology Department is
considering replacing an old inefficient X-ray machine with a state-of-the-art- digital X-
ray machine.The new machine would provide higher quality X-rayin less time and at a
lower cost per X-ray.It would also require less power and would use a color laser printer
to produce easily readable X-ray images.Instead of inversting the funds in the new X-ray
machine,the Laboratory Department is lobbying the Hospital’s management to buy a new
DNA analyzer.

Required

For each of the items below,indicate by placing an X in the appropriate column whether it
should be considered a differential cost,an opportuniy cost, or a sunk cost in the dicision
to replace the old X-ray machine with a new machine.If none of the categories apply for a
particular item, leave all column blank.

ITEM DIFFERENTAIL OPPORTUNITY SUNK COST

ITEM COST
Ex:Cost of X-ray
film used in the old X
machine.

1)Cost of the old X-

ray machine X

2)The salary of the

head of the
Radiology
Department X

3)The salary of the

head of the
Pediatrics
Department. X

4)Cost of the new

color laser printer X

5)Rent on the space

occupied by
Radiology. X

6)The cost of
maintaining the old
machine. X
7)Benefit from a
new DNA analyzer. X

8)Cost of eletricity
to run the X-ray
machine. X