A company is deciding on whether to replace some old equipment with new equipment. Which of the following is not a relevant cost for incremental analysis?
A) Annual operating cost of the new equipment
B) Annual operating cost of the old equipment
C) Net cost of the new equipment
D) Accumulated depreciation on the old equipment

Question

Quizplus · Accepted Answer

Accumulated depreciation on the old equipment is a sunk cost and not relevant as it has already been incurred and cannot be changed. The other options are relevant costs and should be considered in the decision-making process.

A Company Is Deciding on Whether to Replace Some Old