Osprey Company Is Trying to Decide Between the Following Two

question 126

Multiple Choice

Osprey Company is trying to decide between the following two alternatives: $\begin{array}{lrc}&\text { Alternative A }&\text { Alternative B }\\\text { Projected revenue } & \$ 50,000 & \$ 60,000 \\\text { Direct material } & 6,000 & 12,000 \\\text { Assembly labor } & 9,000 & 9,000 \\\text { Production supervisor's salary } & 10,000 & 10,000\\\text { Facility-related costs}&\underline{10,000}&\underline{15,000}\\\text { Profit}&\underline{\$15,000}&\underline{\$14,000}\end{array}$ Which of the following conclusions can be drawn from this example?

• A) Variable costs are always relevant for decision making.
• B) Fixed costs are sunk and thus are never relevant for decision making.
• C) Relevant costs may include variable costs and fixed costs.
• D) None of these answers are correct.

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Definitions:

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Indicators or signals that provide information about an individual's social standing or position in society.

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A band, often made of precious metal, worn as a sign of marriage commitment and fidelity.

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A social psychological and sociological perspective that explains social change and stability as a process of negotiated exchanges between parties.

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Signals or indicators that suggest or confer social standing and position to others.