Stephenson Company Is Trying to Decide Which One of Two

question 3

Multiple Choice

Stephenson Company is trying to decide which one of two contracts it will accept.The costs and revenues associated with each are listed below: $$\begin{array} { | l | r | r | } \hline & \text { Contract X } & \text { Contract Z } \\\hline \text { Contract Revenue } & \$ 200,000 & \$ 260,000 \\\hline \text { Materials } & 10,000 & 10,000 \\\hline \text { Labor } & 88,000 & 120,000 \\\hline \text { Depreciation on Equipment } & 8,000 & 10,000 \\\hline \text { Cost Incurred for Consulting Advice } & 1,500 & 1,500 \\\hline \text { Allocated Portion of Overhead } & 5,000 & 3,000 \\\hline\end{array}$$ The equipment was purchased last year and has no resale value.Which of these amounts is relevant for the selection of one contract over another?

• A) Contract revenue and labor costs
• B) Materials,consulting advice and allocated overhead
• C) Cost of consulting advice and allocated overhead
• D) Contract revenue,labor costs and depreciation on equipment

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Definitions:

Psychiatrist

A medical doctor specialized in diagnosing, preventing, and treating mental illnesses.

Mind

The aspect of intellect and consciousness experienced as combinations of thought, perception, memory, emotion, will, and imagination, including all unconscious cognitive processes.

Treatment

The management and care of a patient or the combating of disease or disorder.

Psychosomatic

Pertaining to or involving both the mind and body, often used to describe physical symptoms that are influenced or exacerbated by mental or emotional factors.