In deciding whether an organization will keep an old machine or purchase a new machine,a manager would ignore the
A)estimated disposal value of the old machine.
B)acquisition cost of the old machine.
C)operating costs of the new machine.
D)estimated disposal value of the new machine.

Question

Quizplus · Accepted Answer

In deciding whether to keep an old machine or purchase a new one, the manager would only consider the acquisition cost of the old machine, as it has already been incurred and is not relevant to the decision. The estimated disposal value of the old machine is relevant, as it depends on whether the organization will get any money by selling the old machine. The operating costs of the new machine are relevant, as they will impact the organization's future expenses. The estimated disposal value of the new machine is not relevant, as it is a future cost that depends on the organization's decision.

In Deciding Whether an Organization Will Keep an Old Machine