A company is trying to decide which product to manufacture. The following inform

Question

A company is trying to decide which product to manufacture. The following information is available:

Costs                                         Product A                        Product B

Direct Materials 1                  $2.00 per unit                 $2.20 per unit

Direct Materials 2                  $1.25 per unit                 $1.50 per unit

Direct Materials 3                  $0.50 per unit                 $0.80 per unit

Direct Labor                            $0.70 per unit                 $0.70 per unit

Which product cost is irrelevant to the decision?

A) Direct Materials 1

B) Direct Materials 2

C) Direct Materials 3

D) Direct Labor

Explanation / Answer

Direct Labor cost is irrelevant to the decision as it is same for both products Option D is correct

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