James is considering replacing his worn-out machines. Which of the following is not a relevant cost for James when considering various available options?
A) Costs of electricity consumed by current machines
B) Changes in costs of labour needed to operate the new machines
C) Costs of delivering the new machine
D) Costs of replacing old machines

Question

Quizplus · Accepted Answer

Relevant costs are those that will change as a result of a decision. The costs of electricity consumed by current machines are sunk costs and will not change with the decision to replace machines, making them irrelevant to the decision-making process.

James Is Considering Replacing His Worn-Out Machines