When considering a project that will require production using otherwise idle resources, which of the following are true?
A) Avoidable fixed costs are irrelevant.
B) Only the variable costs of the project are relevant.
C) Only financial factors should be considered.
D) The project should not be undertaken if total revenue from the project is less than the total costs of production.
E) In the short run, even if revenue is less than the total costs of production, the project could help the company's overall operating income.

Question

Quizplus · Accepted Answer

In the short run, even if revenue is less than the total costs of production, the project could help the company's overall operating income by covering some of the fixed costs.

When Considering a Project That Will Require Production Using Otherwise