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.

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Definitions:

Voluntary Part-time Workers

Individuals who choose to work hours less than the standard full-time work schedule, not due to economic necessity but personal choice.

Official Statistics

Quantitative data and information collected and published by governmental agencies or institutions for economic, demographic, and social analysis.

Child-care

The care and supervision of a child or children, typically from infancy to age thirteen, which includes educational, entertainment, and nutritional components.

Scientific Management

Scientific management is a system of improving productivity developed in the 1910s by Frederick W. Taylor. After analyzing the movements of workers as they did their jobs, Taylor trained them to eliminate unnecessary actions and greatly improve their efficiency.