Couch Company can produce either product A or product B.If Couch Company produces product A, expected direct material cost would be $24,000.If Couch Company produces product B, expected direct material cost would be $24,000.In choosing between these alternatives, the $24,000 direct material cost is _____.
A)relevant because it is an expected future cost
B)relevant because it is a product cost
C)irrelevant because it is an estimated cost
D)irrelevant because it does not differ between alternatives

Question

Quizplus · Accepted Answer

The $24,000 direct material cost is irrelevant because it does not differ between the two alternatives. The decision between product A and B would be based on other relevant factors such as production costs, sales price, demand, and profitability.

Couch Company Can Produce Either Product a or Product B