A company is deciding whether to purchase production equipment which can produce units more quickly than the current equipment. Which of the following costs would be relevant to its decision?
A)The cost of the new equipment
B)The salary of the factory manager
C)The cost of raw materials
D)The original purchase price of the current machinery

Question

Quizplus · Accepted Answer

The cost of the new equipment is relevant because it directly affects the decision to purchase. The other costs are either sunk costs or do not change with the decision.

A Company Is Deciding Whether to Purchase Production Equipment Which