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A company is deciding whether to purchase production equipment which can produce units more quickly than the current equipment. Which of the following costs would be relevant to its decision?
A) The cost of the new equipment
B) The salary of the factory manager
C) The cost of raw materials
D) The original purchase price of the current machinery
12) A restaurant is facing a decision about whether it should bake its own dinner rolls or whether it should continue to purchase the dinner rolls from a local bakery. Which of the following costs would be relevant to its decision?
A) The salary of the restaurant manager
B) The purchase price of the dinner rolls purchased from the local bakery
C) The price the restaurant sells the dinner rolls for
D) The original purchase price of the current machinery
13) A company is deciding whether to purchase hybrid cars for its salespeople or gasoline-engine cars. Which of the following costs would NOT be relevant to its decision?
A) The cost per gallon of gasoline
B) The purchase price of the hybrid model
C) The purchase price of the gasoline-engine model
D) The book value of the current fleet of sales vehicles
14) Label each item below as relevant or irrelevant in making a decision.
A. _____ Cost of insurance on a new vehicle when evaluating purchase of new vehicle
B. _____ Cost of roof repair made on rental property last year when evaluating sale of rental property
C. _____ Original cost of old equipment that is being evaluated for replacement
D. _____ Cost of new equipment that is under evaluation to replace used equipment
E. _____ Accumulated depreciation on old equipment being evaluated for replacement
F. _____ Cost of previous year's insurance policy on old equipment being evaluated for replacement
Dec 07 2019 View more View Less
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