The Sorrento Hotel is a fourstar hotel in downtown Montreal

The Sorrento Hotel is a four-star hotel in downtown Montreal. The hotel\'s operations vice president would like to replace the hotel\'s antiquated computer terminals at the registration desk with attractive state-of-the- art flat-panel displays. The new displays would take less space; consume less power; and provide additional security, since they can be viewed only from a restrictive angle. The new computer displays would not require any new wiring. The hotel\'s chef believes the funds would be better spent on a new bulk freezer for the kitchen. Required: Classify each item as a differential cost, an opportunity cost, or a sunk cost in the decision to replace the old computer terminals with new flat-panel displays. If none of the categories apply for a particular item, select \"None\". Cost Differential Cost 2. Item Ex. Cost of electricity to run the terminals |Cost of the new flat-panel displays |Cost of the old computer terminals 3. Rent on the space occupied by the registration desk 4. Wages of registration desk personnel 5. Benefits from a new freezer |Costs of maintaining the old computer terminals Cost of removing the old computer terminals 8. |Cost of existing registration desk wiring

Solution

Answer:

Type of Cost

Cost Item

Ex.

Cost of electricity to run the terminals

Differential

1

Cost of the new flat-panel displays

Differential

2

Cost of the old computer terminals

Sunk

3

Rent on the space occupied by the registration desk

Sunk

4

Wages of the registration desk personnel

None

5

Benefits from a new freezer

Opportunity

6

Costs of maintaining the old computer terminals

Differential

7

Cost of removing the old computer terminals

Differential

8

Cost of existing registration desk wiring

Sunk

		Type of Cost
Cost Item
Ex.	Cost of electricity to run the terminals	Differential
1	Cost of the new flat-panel displays	Differential
2	Cost of the old computer terminals	Sunk
3	Rent on the space occupied by the registration desk	Sunk
4	Wages of the registration desk personnel	None
5	Benefits from a new freezer	Opportunity
6	Costs of maintaining the old computer terminals	Differential
7	Cost of removing the old computer terminals	Differential
8	Cost of existing registration desk wiring	Sunk