Which costs are relevant for equipment replacement decisions?
A) Unit-level costs
B) Batch-level costs
C) Product-level costs
D) All of the above.

Question

Quizplus · Accepted Answer

All of the above costs are relevant for equipment replacement decisions. Unit-level costs are relevant as they provide information about the cost of producing one unit or output with the old equipment versus the new equipment. Batch-level costs are relevant as they provide information about the cost of producing a batch of products, and if the new equipment can produce larger or more efficient batches, this can impact the decision. Product-level costs are also relevant, as they provide information about the cost of producing different products with the old and new equipment, and if there are differences in cost, this can impact the decision.

Which Costs Are Relevant for Equipment Replacement Decisions