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Category > Management Posted 21 Nov 2017 My Price 7.00

kinds of candy

Exercise 13-1    Distinction between relevance and cost behavior

Leah Friend is trying to decide which of two different kinds of candy to sell in her retail candy store. One type is a name-brand candy that will practically sell itself. The other candy is cheaper to purchase but does not carry an identifiable brand name. Ms. Friend believes that she will have to incur significant advertising costs to sell this candy. Several cost items for the two types of candy are as follows.

 

 

Brandless Candy

 

Name-Brand Cand

y

Cost per box

$      6.00

Cost per box

$      7.00

Sales commissions per box

1.00

Sales commissions per box

1.00

Rent of display space

1,500.00

Rent of display space

1,500.00

Advertising

3,000.00

Advertising

2,000.00

 

Required

Identify each cost as being relevant or irrelevant to Ms. Friend’s decision and indicate whether it is fixed or variable relative to the number of boxes sold.

 

Answers

Maurice Tutor
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Status NEW Posted 21 Nov 2017 04:11 PM My Price 7.00

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