Amazin Company is trying to decide which one of two contracts it will accept. The costs and revenues associated with each are listed below:
Contract X Contract Z
Contract revenue $200,000 $260,000
Materials 10,000 10,000
Labor 8800 120,000
Depreciation on Equipment 8,000 10,000
Cost incurred for consulting advice 1,500 1,500
Allocated portion of overhead 5,000 3,000
Which of these amounts is relevant for the selection of one contract over another?
a. Contract revenue and cost of materials
b. Materials, consulting advice and allocated overhead
c. Cost of consulting advice and allocated overhead
d. Contract revenue and labor costs
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