Stephenson Company Is Trying to Decide Which One of Two

question 104

Multiple Choice

Stephenson Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below: $$\begin{array} { | l | r | r | } \hline & \text { Contract X } & \text { Contract Z } \\\hline \text { Contract Revenue } & \$ 200,000 & \$ 260,000 \\\hline \text { Materials } & 10,000 & 10,000 \\\hline \text { Labor } & 88,000 & 120,000 \\\hline \text { Depreciation on Equipment } & 8,000 & 10,000 \\\hline \text { Cost Incurred for Consulting Advice } & 1,500 & 1,500 \\\hline \text { Allocated Portion of Overhead } & 5,000 & 3,000 \\\hline\end{array}$$ The equipment was purchased last year and has no resale value. Which of these amounts is relevant for the selection of one contract over another?

• A) Contract revenue and labor costs
• B) Materials, consulting advice and allocated overhead
• C) Cost of consulting advice and allocated overhead
• D) Contract revenue, labor costs and depreciation on equipment

---

Definitions:

Knowledge

refers to information, understanding, or skills obtained through experience or education.

Components of Knowledge Management

The processes and systems that capture, store, and distribute knowledge within an organization to improve understanding, collaboration, and process efficiency.

Managerial Decision Making

The process by which managers make choices among alternatives to guide the behaviors of others toward achieving organizational goals.

Basic Models

Fundamental frameworks or theories that serve as the foundational concepts in various fields of study or arenas of practice.