Only materials costs are relevant Only processing costs are relevant What is the
ID: 2635721 • Letter: O
Question
Only materials costs are relevant
Only processing costs are relevant
What is the differential cost of Alternative Y over Alternative X, including all of the relevant costs?
$103,000
$39,000
$142,000
$122,500
Both materials costs and processing costs are relevant
Neither materials costs nor processing costs are relevant
Only materials costs are relevant
Only processing costs are relevant
What is the differential cost of Alternative Y over Alternative X, including all of the relevant costs?
$103,000
$39,000
$142,000
$122,500
Both materials costs and processing costs are relevant
Neither materials costs nor processing costs are relevant
Two alternatives, code-named X and Y, are under consideration at Afalava Corporation. Costs associated with the alternatives are listed below. Are the materials costs and processing costs relevant in the choice between alternatives X and Y? (Ignore the equipment rental and occupancy costs in this question.) Only materials costs are relevant Only processing costs are relevant What is the differential cost of Alternative Y over Alternative X, including all of the relevant costs? $103,000 $39,000 $142,000 $122,500 Both materials costs and processing costs are relevantExplanation / Answer
Only processing cost is relevant as relevant cost means the cost which help to take the decision.In other words we can say the cost which have an influence on decision making.
Material cost is irrelevant cost in this case as although it continue to remain same in each alternative course of action but does not continue to occur when no alternative course of action to be considered.
Differential cost of alternative Y over alternative X including all relevant cost will be $ 39000.
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