Osprey Company Is Trying to Decide Between the Following Two

question 12

Multiple Choice

Osprey Company is trying to decide between the following two alternatives: Which of the following conclusions can be drawn from this example?
$$\begin{array} { | l | r | r | } \hline & \text { Alternative A } & \text { Alternative B } \\\hline \text { Projected revenue } & \$ 50,000 & \$ 60,000 \\\hline \text { Direct material } & 6,000 & 12,000 \\\hline \text { Assembly labor } & 9,000 & 9,000 \\\hline \text { Production supervisor's salary } & 10,000 & 10,000 \\\hline\text { Facility-related costs } & 10,000 & 15,000 \\\hline \text { Profit } & \$ 15,000 & \$ 14,000 \\\hline & & \\\hline\end{array}$$

• 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:

Boeing

An American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, and telecommunications equipment worldwide.

Generation

A group of individuals, born and living around the same time, who experience similar societal events and cultural phenomena.

Culture Group

A collection of individuals who share similar values, beliefs, and customs, often connected by a common ethnicity or geographical region.

Age Group

A category of people classified together based on their age, often used for demographic, marketing, or research purposes.