Question
Stephenson Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below: Contract
Stephenson Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below: Contract Revenue Contract X $200,000 ContractZ$260,000 Materials X10,000 Z10,000 Labor X88,000 Z120,000 Depreciation on Equipment X8,000 Z10,000 Cost Incurred for Consulting Advice X1,500 Z1,500 Allocated Portion of Overhead X5,000 Z 3,000 The equipment was purchased last year and has no resale value. Which of these amounts is relevant for the selection of one contract over another? a) Contract revenue and labor costs b) Materials, consulting advice and allocated overhead c) Cost of consulting advice and allocated overhead d) Contract revenue, labor costs and depreciation on equipment
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