Reference no: EM132633176

ABC company is trying to decide which of two different kinds of chips to sell in the retail store. One type is a name-brand chip that will practically sell itself. The other chip is less expensive to purchase but does not carry an identifiable brand name. The Controller believes the company would have to incur significant advertising costs to sell this chip. Costs for the two chips are detailed below.

Brandless Chips                                                              Name-Brand Chips

Cost per box $5.00                                         Cost per box $7.00

Sales Commission per box $1.50                        Sales Commission per box $1.50

Rent of display space $700.00                          Rent of display space $700.00

Advertising $4,500.00                                     Advertising $3,000.00

Problem 1: Identify each cost as relevant or irrelevant to the decision-making process.

Cost per box is

Sales commission per box is

Rent of display space is

Advertising is