Osprey Company Is Trying to Decide Between the Following Two

question 76

Multiple Choice

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

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