Question

Two alternatives, code-named X and Y, are under consideration at Guyer Corporation. Costs associated with the alternatives are listed below. Alternative X Alternative Y Materials costs $ 41,000 $ 59,000 Processing costs $ 45,000 $ 45,000 Equipment rental $ 17,000 $ 17,000 Occupancy costs $ 16,000 $ 24,000 Are the materials costs and processing costs relevant in the choice between alternatives X and Y? Multiple Choice Neither materials costs nor processing costs are relevant Only processing costs are relevant Only materials costs are relevant Both materials costs and processing costs are relevant

Answer 1

Answer:

The correct answer is C.

Explanation:

Giving the following information:

Costs associated with the alternatives are listed below.

Alternative X

Materials costs $ 41,000

Processing costs $ 45,000

Equipment rental $ 17,000

Occupancy costs $ 16,000

Alternative Y

Materials costs $ 59,000

Processing costs $ 45,000

Equipment rental $ 17,000

Occupancy costs $ 24,000

Only Material Costs are relevant because they vary whether you chose Alternative X or Y. Processing costs are the same in both options.