Question

Costs associated with two alternatives, code-named Q and R, being considered by Albiston Corporation are listed below: Alternative Q Alternative R Supplies costs $ 74,000 $ 74,000 Power costs $ 34,200 $ 33,400 Inspection costs $ 27,000 $ 33,400 Assembly costs $ 39,000 $ 39,000 Required: a. Which costs are relevant and which are not relevant in the choice between these two alternatives

Answer 1

Step-by-step explanation:

Relevant costs are the costs which are affected by the decisions made by the management of an organization while irrelevant costs do not change in future as they're not affected by the decisions from the management.

Based on the information given, the relevant cost are:

1. Power cost

2. Inspection cost

The non relevant cost are:

1. Supplies cost

2. Assembly cost