For machine-replacement decisions, depreciation is a cost that is:
A)not relevant
B)differential
C)incremental
D)variable

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense that does not affect cash flow and, therefore, is not a relevant cost for machine-replacement decisions. Relevant costs are those that differ between the available options and can influence the decision. Differential, incremental, and variable costs are all examples of relevant costs, but depreciation is not.

For Machine-Replacement Decisions, Depreciation Is a Cost That Is