Chapter 2, Problem 2.40BE

Determine whether information is relevant (Learning Objective 6)

Classify each of the following costs as relevant or irrelevant to the decision at hand and briefly explain your reason.

1. a. The cost of production when determining whether to continue to manufacture the screen for a smartphone or to purchase it from an out side supplier (old equipment will be sold if new equipment is purchased)
2. b. The cost of land when determining where to build a new call center
3. c. The average cost of vehicle operation when purchasing a new delivery van
4. d. Real estate property tax rates when selecting the location for a new order processing center
5. e. The purchase price of the old computer when replacing it with a new computer with improved features
6. f. The cost of renovations when deciding whether to build a new office building or to renovate the existing office building
7. g. The original cost of the current stove when selecting a new, more efficient stove for a restaurant
8. h. Local tax incentives when selecting the location of a new office complex for a company’s headquarters
9. i. The fair market value (trade-in value) of the existing forklift when deciding whether to replace it with a new, more efficient model
10. j. Fuel economy when purchasing new trucks for the delivery fleet