For the past 10 years,Husky Company has produced the small gas motors that fit into its main product line of weed cutting machines.As material costs have steadily increased,the Controller of Husky Company is reviewing the decision to continue to make the small motors and has identified the following facts:

Which of the items above are relevant to the decision that the controller has to make?
A)1,3,and 4
B)2,3,and 4
C)2,3,4,and 5
D)1,2,4,and 5

Question

For the past 10 years,Husky Company has produced the small gas motors that fit into its main product line of weed cutting machines.As material costs have steadily increased,the Controller of Husky Company is reviewing the decision to continue to make the small motors and has identified the following facts:

Which of the items above are relevant to the decision that the controller has to make?

Which of the items above are relevant to the decision that the controller has to make?
A)1,3,and 4 
B)2,3,and 4 
C)2,3,4,and 5 
D)1,2,4,and 5

Quizplus · Accepted Answer

The relevant items for the decision are material costs (item 2), direct labor costs (item 3), variable overhead costs (item 4), and the contribution margin (item 5). Item 1, the number of units produced, is not relevant as it does not directly affect the cost per unit.

For the Past 10 Years,Husky Company Has Produced the Small