A restaurant is facing a decision about whether it should bake its own apple pies or whether it should continue to purchase the pies from a local bakery. Which of the following costs would be relevant to its decision?
A)The salary of the restaurant manager
B)The price the restaurant sells the apple pies for
C)The purchase price of the apple pies purchased from the local bakery
D)The original purchase price of the current machinery

Question

Quizplus · Accepted Answer

The purchase price of the apple pies purchased from the local bakery is relevant because it is a cost that the restaurant would save if it were to bake the pies themselves. The salary of the restaurant manager and the price the restaurant sells the pies for are not relevant to this decision. The original purchase price of the machinery is also not relevant unless the decision involves purchasing new equipment to bake the pies in-house.

A Restaurant Is Facing a Decision About Whether It Should