Osprey Company is trying to decide between the following two alternatives: $\begin{array}{lrc}
&\text { Alternative A }&\text { Alternative B }\
\text { Projected revenue } & \$ 50,000 & \$ 60,000 \
\text { Direct material } & 6,000 & 12,000 \
\text { Assembly labor } & 9,000 & 9,000 \
\text { Production supervisor's salary } & 10,000 & 10,000\
\text { Facility-related costs}&\underline{10,000}&\underline{15,000}\

\text { Profit}&\underline{\$15,000}&\underline{\$14,000}
\end{array}$ Which of the following conclusions can be drawn from this example?

Question

Osprey Company is trying to decide between the following two alternatives: $\begin{array}{lrc}
&\text { Alternative A }&\text { Alternative B }\
\text { Projected revenue } & \$ 50,000 & \$ 60,000 \
\text { Direct material } & 6,000 & 12,000 \
\text { Assembly labor } & 9,000 & 9,000 \
\text { Production supervisor's salary } & 10,000 & 10,000\
\text { Facility-related costs}&\underline{10,000}&\underline{15,000}\

\text { Profit}&\underline{\$15,000}&\underline{\$14,000}
\end{array}$ Which of the following conclusions can be drawn from this example?

Quizplus · Accepted Answer

The example provided includes both variable and fixed costs, indicating that relevant costs may include both types of costs. Option A is incorrect as it is not always true that variable costs are relevant for decision making. Option B is incorrect as fixed costs can be relevant depending on the decision being made. Option D is incorrect as there is a correct answer.

Osprey Company Is Trying to Decide Between the Following Two