Cantrall Company is trying to decide which product to manufacture.Expected direct materials costs are $4.00 per unit for each product.The expected direct labor costs are $2.00 per unit for one product and $4.00 per unit for another product.In choosing between the two products,the direct materials costs are ________ and the direct labor costs are ________.
A) relevant; irrelevant
B) irrelevant; relevant
C) relevant; relevant
D) irrelevant; irrelevant

Question

Quizplus · Accepted Answer

Since the direct materials costs are the same for both products ($4.00 per unit), they do not affect the decision and are therefore irrelevant. However, the direct labor costs differ between the two products ($2.00 per unit for one product and $4.00 per unit for another), making them relevant to the decision-making process.

Cantrall Company Is Trying to Decide Which Product to Manufacture