Osprey Company Is Trying to Decide Between the Following Two

question 94

Multiple Choice

Osprey Company is trying to decide between the following two alternatives: $\begin{array}{|l|r|r|}\hline & \underline {\text { Alternative A }} & \underline {\text { Alternative B }} \\\hline \text { Projected revenue } & \$ 50,000 & \$ 60,000 \\\hline \text { Direct material } & 6,000 & 12,000 \\\hline \text { Assembly labor } & 9,000 & 9,000 \\\hline \text { Production supervisor's salary } & 10,000 & 10,000 \\\hline \text { Facility-related costs } & \underline {10,000} & \underline {15,000} \\\hline \text { Profit } &\underline { \$ 15,000} & \underline {\$ 14,000} \\\hline\\\hline\end{array}$ 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 the above.