Consider the Following Decision Option Data What Is the Best Choice?
A)Option #1
B)Option #2
C)Option

question 8

Multiple Choice

Consider the following decision option data: $\begin{array}{lll}&\text { Option \#1 } & \text { Option \#2 } \\\text { Number of units } & 150 & 200 \\\text { Revenue per unit } & \$ 25 & \$ 25 \\\text { Cost per unit } & \$ 12 & \$ 12 \\\text { Lost Revenue from choosing option } & \{\$ 500\} & \{\$ 4,000\} \\\text { Cost saving from choosing option } & \$ 0 & \$ 1,000 \\\text { Avo idable Fixed Cost } & \$ 0 & \$ 0\end{array}$ What is the best choice?

• A)Option #1
• B)Option #2
• C)Option #1 and Options #2 are equally good choices.
• D)Neither Option #1 nor Option #2 should be chosen

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Definitions:

Cash Basis

An accounting method where revenues and expenses are recorded only when cash is received or paid, regardless of when the transactions occurred.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor used in creating the good.

Direct Method

A cash flow statement presentation method that shows actual cash inflows and outflows from operating activities, as opposed to the indirect method which starts with net income and adjusts for non-cash transactions.

Cash Basis

A financial recording strategy that logs earnings and expenditures upon the actual receipt or payment of money, as opposed to when they are earned or incurred.