The Costs and Revenues Associated with Two Alternatives Are Listed

question 137

Multiple Choice

The costs and revenues associated with two alternatives are listed below: $$\begin{array} { | l | r | r | } \hline & \text { Altemative 1 } & \text { Alternative 2 } \\\hline \text { Projected revenue } & \$ 100,000 & \$ 125,000 \\\hline \text { Unit-level costs } & 20,000 & 30,000 \\\hline \text { Batch-level costs } & 20,000 & 25,000 \\\hline \text { Product-level costs } & 15,000 & 15,000 \\\hline \text { Facility-level costs } & 10,000 & 10,000 \\\hline\end{array}$$ Which alternative should be selected based on this information?

• A) Alternative 2 because it has a higher profit.
• B) Alternative 2 because it has the same product- & facility-level costs.
• C) Alternative 1 because it has fewer unit-level costs.
• D) Alternative 1 because it has a higher profit.

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Definitions:

Tuition

The fee that educational institutions charge for instruction.

Books

Physical or electronic publications consisting of written, printed, or illustrated work bound together for reading or study.

Inventory Cost

The total cost associated with holding and managing inventory, including storage, insurance, and obsolescence.

Building

A structure with a roof and walls, such as a house or factory, used for living, working, storage, or other purposes.