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.

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