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A factory is operating at less than 100% capacity. Potential additional business will not use up the remainder of the plant capacity. Given the following list of costs which one should be ignored in a decision to produce additional units of product?
a. Variable selling expenses
b. Fixed factory overhead
c. Direct labor
d. Contribution margin of additional units

Respuesta :

sandlee09

Answer:

b.

Explanation:

According to my research on business financial costs, I can say that based on the information provided within the question the cost that should be ignored is the Fixed Factory Overhead costs. This is because this refers to a set of costs that don't change at all with additional changes in production, instead it stays at a fixed amount. Therefore a decision to produce additional units of a product will have no effect on this and should therefore be ignored.

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