Asked by Waleed Abdullah on Jun 04, 2024
Verified
Consider a decision facing a firm of either accepting or rejecting a special offer for on of its products. A cost that is not relevant is:
A) fixed overhead that will be avoided if the special offer is accepted.
B) common fixed overhead that will continue if the special offer is not accepted.
C) variable overhead.
D) direct materials.
Fixed Overhead
Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance.
Special Offer
A promotional deal or discount aimed at encouraging consumers to buy a product or service.
Direct Materials
The raw materials that can be directly traced to the manufacturing of a product.
- Gain insight into the critical role of applicable costs in decision-making.
Verified Answer
MS
Mujtaba SadiqJun 09, 2024
Final Answer :
B
Explanation :
Common fixed overhead that will continue regardless of the decision is not relevant to the decision-making process because it does not change based on the outcome of the decision.
Learning Objectives
- Gain insight into the critical role of applicable costs in decision-making.
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