Depreciation expense on existing factory equipment is generally relevant to a decision of whether to accept or reject a special offer for a company's product.

Question

Quizplus · Accepted Answer

Depreciation on existing factory equipment is a sunk cost and therefore not relevant in a decision of whether to accept or reject a special offer. Only incremental costs and revenues should be considered in such a decision.

Depreciation Expense on Existing Factory Equipment Is Generally Relevant to a Decision