Nesmith Corporation is considering two alternatives: A and B. Costs associated with the alternatives are listed below:

-Are the materials costs and processing costs relevant in the choice between alternatives A and B? (Ignore the equipment rental and occupancy costs in this question.)
A)Both materials costs and processing costs are relevant
B)Only materials costs are relevant
C)Neither materials costs nor processing costs are relevant
D)Only processing costs are relevant

Question

Nesmith Corporation is considering two alternatives: A and B. Costs associated with the alternatives are listed below:

-Are the materials costs and processing costs relevant in the choice between alternatives A and B? (Ignore the equipment rental and occupancy costs in this question.)
A)Both materials costs and processing costs are relevant 
B)Only materials costs are relevant 
C)Neither materials costs nor processing costs are relevant 
D)Only processing costs are relevant

Quizplus · Accepted Answer

Both materials costs and processing costs are relevant in making a decision between alternatives A and B. The overall cost of each alternative should be calculated, including the costs of materials and processing. Only then can a proper comparison between the two alternatives be made.

Nesmith Corporation Is Considering Two Alternatives: a and B