Osprey Company Is Trying to Decide Between the Following Two

question 46

Multiple Choice

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

Recognize the relevance of the Capital Asset Pricing Model (CAPM) in evaluating investments.

Understand the difference between systematic and unsystematic risk and their implications for investment strategy.

Comprehend how managerial decisions can impact a firm's beta and overall risk profile.

Acknowledge the role of macroeconomic factors, such as inflation, on investment returns and the risk-free rate.

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Definitions:

Emergency Contraception

A method of preventing pregnancy after unprotected sex or contraceptive failure, often referred to as the morning-after pill.

Symptothermal Method

A fertility awareness method of birth control that combines three fertility indicators: calendar (rhythm) method, basal body temperature method, and cervical mucus method.

Calendar

A system for organizing and dividing time, typically by weeks, months, and years.

Cervical Mucus

A fluid secreted by the cervix, varying in consistency throughout the menstrual cycle, playing a key role in fertility and acting as a natural barrier to pathogens.