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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Definitions:

F-test

A statistical test used to compare two variances and determine if they come from populations with equal variances.

Kruskal-Wallis Test

A nonparametric method for testing whether samples originate from the same distribution, used when the assumption of normality in ANOVA is violated.

P-value

The probability of observing test results at least as extreme as the results actually observed, under the assumption that the null hypothesis is true.

Test Statistic

A value calculated from sample data during a hypothesis test to decide whether to reject the null hypothesis.