BEE Company is considering the replacement of a machine that is presently used in production.Which of the following items are irrelevant to the replacement decision?
A)annual operating cost of the old machine
B)original cost of the new machine
C)disposal value of the old machine at time of replacement
D)original cost of old machine

Question

Quizplus · Accepted Answer

The original cost of the old machine is irrelevant because it is a sunk cost and cannot be recovered. The replacement decision should be made based on future costs and benefits.

BEE Company Is Considering the Replacement of a Machine That