A company is deciding whether to purchase hybrid cars for its salespeople or gasoline-engine cars. Which of the following costs is irrelevant to its decision?
A) The cost per gallon of gasoline
B) The purchase price of the hybrid model
C) The purchase price of the gasoline-engine model
D) The book value of the current fleet of sales vehicles

Question

Quizplus · Accepted Answer

The book value of the current fleet of sales vehicles is irrelevant because it is a sunk cost and cannot be recovered regardless of what decision is made. The company should focus on the future costs and benefits of each option. A, B, and C are all relevant costs that should be considered in the decision-making process.

A Company Is Deciding Whether to Purchase Hybrid Cars for Its