Answer the following question(s)using the information below.Mable's Engine Company manufactures part Z92 used in several of its engine models.Monthly production costs for 1,000 units are as follows:
Mable's Engine Company has the option of purchasing the part from an outside supplier at $61 per unit.It is estimated that all of the fixed overhead costs assigned to Z92 will remain if the company purchases Z92 from the outside supplier.
-Unit cost data can mislead decisions by including irrelevant costs or by
A)not computing fixed overhead costs.
B)computing labour and materials costs only.
C)computing administrative costs.
D)not computing unit costs at the relevant output level.
E)including qualitative data.

Question

Answer the following question(s)using the information below.Mable's Engine Company manufactures part Z92 used in several of its engine models.Monthly production costs for 1,000 units are as follows:
  Mable's Engine Company has the option of purchasing the part from an outside supplier at $61 per unit.It is estimated that all of the fixed overhead costs assigned to Z92 will remain if the company purchases Z92 from the outside supplier.
-Unit cost data can mislead decisions by including irrelevant costs or by
A)not computing fixed overhead costs. 
B)computing labour and materials costs only. 
C)computing administrative costs. 
D)not computing unit costs at the relevant output level. 
E)including qualitative data.

Quizplus · Accepted Answer

Unit cost data can mislead decisions by not computing unit costs at the relevant output level, meaning that the cost per unit may change depending on the level of production. For example, in this scenario, the monthly production costs are given for 1,000 units but if the company decides to produce more units, the costs per unit may change. Therefore, it is important to consider the relevant output level when making cost-related decisions.

Answer the Following Question(s)using the Information Below