A Factory Is Operating at Less Than 100% Capacity

question 155

Multiple Choice

A factory is operating at less than 100% capacity. Potential additional business will not use up the remainder of the plant capacity. Given the following list of costs, which one should be ignored in a decision to produce additional units of product?

• A) Variable selling expenses
• B) Fixed factory overhead
• C) Direct labor
• D) Contribution margin of additional units

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