A company is trying to decide which product to manufacture. The following information is available: Costs Product A Product B Direct Materials 1 $4.50 per unit $5.00 per unit Direct Materials 2 $1.75 per unit $2.50 per unit Direct Materials 3 $3.75 per unit $2.75 per unit Direct Labor $1.10 per unit $1.10 per unit Which product cost is irrelevant to the decision?

Question

Business

Dominique Ingram

28 July, 08:47

A company is trying to decide which product to manufacture. The following information is available: Costs Product A Product B Direct Materials 1 $4.50 per unit $5.00 per unit Direct Materials 2 $1.75 per unit $2.50 per unit Direct Materials 3 $3.75 per unit $2.75 per unit Direct Labor $1.10 per unit $1.10 per unit Which product cost is irrelevant to the decision?

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Answers (1)

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Quinn Waller · Answer 1

Direct Labor

Explanation:

Direct labor cost is irrelevant to decide product A or product B because it is indifferent for both the product. direct labor cost will remain same in both the options. While Direct material 1,2 and 3 are different in both the option.