Redmond Ltd is closing one of its divisions. Operating data on this division follows: Overhead consists of $30,000 in salary and $10,000 for rent and insurance. The salary is for the chief engineer, who will continue to work for Redmond even if the division is closed.
Rent and insurance that will cease if the division is closed is an
A) Unavoidable and irrelevant cost
B) Unavoidable and relevant cost
C) Avoidable and irrelevant cost
D) Avoidable and relevant cost

Question

Redmond Ltd is closing one of its divisions. Operating data on this division follows:  Overhead consists of $30,000 in salary and $10,000 for rent and insurance. The salary is for the chief engineer, who will continue to work for Redmond even if the division is closed.
Rent and insurance that will cease if the division is closed is an
A) Unavoidable and irrelevant cost 
B) Unavoidable and relevant cost 
C) Avoidable and irrelevant cost 
D) Avoidable and relevant cost

Quizplus · Accepted Answer

The Answer of Redmond Ltd is closing one of its divisions. Operating data on this division follows:  Overhead consists of $30,000 in salary and $10,000 for rent and insurance. The salary is for the chief engineer, who will continue to work for Redmond even if the division is closed.
Rent and insurance that will cease if the division is closed is an
A) Unavoidable and irrelevant cost 
B) Unavoidable and relevant cost 
C) Avoidable and irrelevant cost 
D) Avoidable and relevant cost

Redmond Ltd Is Closing One of Its Divisions