Which of the following would you NOT consider when making a capital budgeting decision?
A)The additional taxes a firm would have to pay in the next year.
B)The cost of a marketing study completed last year.
C)The opportunity to lease out a warehouse instead of using it to house a new production line.
D)The change in direct labor expense due to the purchase of a new machine.

Question

Quizplus · Accepted Answer

The cost of a marketing study completed last year is a sunk cost and should not be considered when making future capital budgeting decisions. Sunk costs are costs that have already been incurred and cannot be recovered or changed, therefore they should not be factored into future decision-making. The other options listed are relevant factors to consider when making a capital budgeting decision.

Which of the Following Would You NOT Consider When Making