Marigold Corp. spent $4800 to produce Product 89, which can be sold as is for $6000,...
Marigold Corp. spent $4800 to produce Product 89, which can be sold as is for $6000, or processed further incurring additional costs of $1800 and then be sold for $8400. Which amounts are relevant to the decision about Product 89?
a. $4800, $6000, $1800 and $8400
b. $4800, $6000, and $8400
c. $6000, $1800, and $8400
d. $4800, $6000, and $1800
Homework Answers
Relevant decision means if any transaction will affect your decision than that transaction is relevant for you. In given question below two transaction is accruing.
By spending $ 4,800 Product 89 will generate the revenue of $ 6,000
It means revenue generated at this point = $6,000 - $ ,4800 = $ 1,200
On further process Additional cost incurred $ 1,800 and additional revenue is generate = $8,400 - $ 6,000 = $ 2,400
In both transaction income is affecting than it means all above amount are relevant for decision making.
Answer = Option A = $ 4800 , $ 6000 ,$1800 and $8,400
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