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A Company Is Trying to Decide Which Product to Manufacture

Question 98

Multiple Choice

A company is trying to decide which product to manufacture.The following information is available:
 Costs  Product A  Product B  Direct Materials 1 $2.00 per unit $2.20 per unit  Direct Materials 2 $1.25 per unit $1.50 per unit  Direct Materials 3 $0.50 per unit $0.80 per unit  Direct Labor $0.70 per unit $0.70 per unit \begin{array}{lll}\text { Costs }&\text { Product A }&\text { Product B }\\\text { Direct Materials 1 } & \$ 2.00 \text { per unit } & \$ 2.20 \text { per unit } \\\text { Direct Materials 2 } & \$ 1.25 \text { per unit } & \$ 1.50 \text { per unit } \\\text { Direct Materials 3 } & \$ 0.50 \text { per unit } & \$ 0.80 \text { per unit } \\\text { Direct Labor } & \$ 0.70 \text { per unit } & \$ 0.70 \text { per unit }\end{array}
Which product cost is irrelevant to the decision?


A) Direct Materials 1
B) Direct Materials 2
C) Direct Materials 3
D) Direct Labor

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