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Question
Which of the following constitutes an example of a cost which is not incremental, and therefore not relevant in an accept/reject decision?
a. A firm has a parcel of land that can be used for a new plant site or, alternatively, can be used to grow watermelons.
b. A firm can produce a new cleaning product that will generate new sales, but some of the new sales will be from customers who switch from another product the company currently produces.
c. A firm orders and receives a piece of new equipment which is shipped across the country and requires $25,000 in installation and set-up costs.
d. All of the above are not examples of incremental cash flows.
e. Answers a, b, and c are examples of incremental, and therefore relevant, cash flows.
Answer
This answer is hidden. It contains 1 characters.
Related questions
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