Ouzts Corporation Is Considering Alternative a and Alternative B

question 122

Multiple Choice

Ouzts Corporation is considering Alternative A and Alternative B. Costs associated with the alternatives are listed below:

-Are the materials costs and processing costs relevant in the choice between alternatives A and B?

• A) Both materials costs and processing costs are relevant
• B) Neither materials costs nor processing costs are relevant
• C) Only processing costs are relevant
• D) Only materials costs are relevant

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Definitions:

Property, Plant, and Equipment

Long-term assets vital to business operations and not easily converted into cash, encompassing real estate, factories, machinery, and more.

Buildings

Assets classified in accounting as long-term or fixed assets, representing structures owned by a company for business use.

Return On Assets

A profitability ratio that measures how efficiently a company uses its assets to generate profit, calculated as net income divided by total assets.

Asset Turnover

A ratio that measures the efficiency of a company's use of its assets in generating sales revenue.