MC Question 30
| $ | ||
|---|---|---|
| Direct materials: | ||
| Fabric | 200 m2 at $17 per m2 | 3,400 |
| Wood | 50 m2 at $8·20 per m2 | 410 |
| Direct labour: | ||
| Skilled | 200 hours at $16 per hour | 3,200 |
| Semi-skilled | 300 hours at $12 per hour | 3,600 |
| Factory overheads | 500 hours at $3 per hour | 1,500 |
| Total production cost | 12,110 | |
| General fixed overheads as 10% of total production cost | 1,211 | |
| Total cost | 13,321 |
Which of the following statements about relevant costing are true?
(1) An opportunity cost will always be a relevant cost even if it is a past cost
(2) Fixed costs are always general in nature and are therefore never relevant
(3) Committed costs are never considered to be relevant costs
(4) An opportunity cost represents the cost of the best alternative forgone
(5) Notional costs are always relevant as they make the estimate more realistic
(6) Avoidable costs would be saved if an activity did not happen and so are relevant
(7) Common costs are only relevant if the viability of the whole process is being assessed
(8) Differential costs in a make or buy decision are not considered to be relevant
A. (3), (4), (6) and (8)
B. (1), (2), (5) and (8)
C. (3), (4), (6) and (7)
D. (4), (5) and (6)