Brio Company is considering eliminating a product line.If it eliminates the product,equipment,which originally cost $250,000,will be disposed of for $6,000.The equipment has a book value of $75,000 and annual depreciation of $25,000.Ignoring income tax,what is the relevant amount for the product-elimination decision?
A)$250,000
B)$75,000
C)$25,000
D)$6,000

Question

Quizplus · Accepted Answer

The relevant amount for the product-elimination decision is the disposal value of the equipment, which is $6,000. The original cost, book value, and annual depreciation are sunk costs and not relevant to the decision.

Brio Company Is Considering Eliminating a Product Line