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

Question

Quizplus · Accepted Answer

The cost of the new equipment is relevant because it directly affects the decision to purchase the new machinery. Other costs like the factory manager's salary and raw materials are ongoing and not directly impacted by the decision, while the original purchase price of the current machinery is a sunk cost and not relevant to the decision.

A Company Is Deciding Whether to Purchase Production Equipment Which