Q 20.26: You are considering upgrading from your current inkjet printer to a laser printer. Your old printer cost $350. The new printer costs $600. Print cartridges for the old printer cost $80 each, and print cartridges for the new printer cost $120 each. Cartridges for both printers last for approximately 500 sheets of printing. Your roommate has offered to purchase your old printer for $50. You expect to print 250 sheets per month. What is the differential cost of purchasing the new printer, considering only the purchase price

The differential cost of purchasing the new printer is $250.

Explanation:

Differential cost can be described as the difference between the cost of a change in the level of output, or the cost of two alternative decision.

Therefore, differential cost concept is employed when there are two or more possible option to pursue and  decision has to be made to choose one one option and drop the other options.

Since it is indicated in the question that only the purchase price should be considered, the differential cost of purchasing the new printer can be calculated as follows:

Differential cost of purchasing the new printer = Cost of new printer - Cost of old printer (1)

Where;

Cost of new printer = $600

Cost of old printer = $350

Substituting the values into equation (1), we have:

Differential cost of purchasing the new printer = $600 - $350 = $250

Therefore, the differential cost of purchasing the new printer is $250.

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