An auto body shop is trying to decide whether or not to purchase a new piece of diagnostic equipment.Which of the following costs would not be relevant to the decision?
A)The cost of the new equipment
B)The increase in property taxes as a result of purchasing the expensive equipment
C)The book value of the old equipment
D)The cost of training a technician to operate the equipment

Question

Quizplus · Accepted Answer

The book value of the old equipment is a sunk cost, meaning it has already been incurred regardless of future decisions, and thus is not relevant to the decision of purchasing new equipment.

An Auto Body Shop Is Trying to Decide Whether or Not