When a company is considering discontinuing production of a product, the salvage value of the production machinery would usually be relevant to the decision.

Question

Quizplus · Accepted Answer

The salvage value of the production machinery is a relevant cost to consider in the decision to discontinue production of a product. This value represents the amount of money that the company could receive from selling the machinery if production is discontinued, and should be subtracted from any costs associated with continuing production to determine the financial impact of the decision.

When a Company Is Considering Discontinuing Production of a Product