Coyote Company spent $8,000 to produce its new device. This new device can be sold as-is for $10,000 or processed further at an additional cost of $3,000 and will then be sold for $14,000. Which amounts are relevant to the decision about the new device?
A)$8,000, $10,000, $3,000 and $14,000.
B)$10,000, $3,000 and $14,000.
C)$8,000, $3,000 and $14,000.
D)$8,000, $10,000, and $14,000.

Question

Quizplus · Accepted Answer

The relevant amounts are the additional processing cost of $3,000, the as-is selling price of $10,000, and the selling price after further processing of $14,000. The initial $8,000 is a sunk cost and not relevant to the decision.

Coyote Company Spent $8,000 to Produce Its New Device