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

Answer 1

Answer: Only Material costs are relevant

Explanation:

The material cost under alternative X is given as $41000 while under alternative Y is given as $59000.

The processing cost under alternative X is given as $45000 while under alternative Y, the processing cost is given as $45000 as well.

Then, we can deduce that only the materials costs are relevant since the processing costs are thesame.