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 (2 years left)
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 changed. The decision should be based on the future costs and benefits. A, B, and C are all relevant factors that should be considered in the decision-making process.

BEE Company Is Considering the Replacement of a Machine That