Define the relevant and irrelevant costs

Reference no: EM13193940

What are the relevant and irrelevant costs?

Two partners who own Progressive Business Solutions, which currently operates out of an office in a small town near Boston, just discovered a vacancy in an office building in downtown Boston. One of the partners favors moving downtown because she believes the additional business gained by moving downtown will exceed the higher rent at the downtown location plus the cost of making the move. The other partner at PBS opposes moving downtown. He argues, "We have already paid for the office stationery, business cards, and a large sign that cannot be moved or sold. We have spent so much on our current office that we can't afford to waste this money by moving now." Evaluate the second partner's advice not to move downtown. Illustrate and fully explain using an example of relevant cost (a cost whose value does affect the optimal decision) and an example of irrelevant cost (a cost whose value does not affect the optimal decision) to the business regarding this decision.

Reference no: EM13193940

Questions Cloud

How fast is the balloon rising : The person is a constant 93 feet away from the balloon's starting point and the angle that the rope makes with the ground increases at a rate of 0.01 radians/minute. How fast is the balloon rising when the angle is 0.6 radians?

State the rest being sodium bicarbonate or baking soda : 36.0% sodium chloride or table salt, and the rest being sodium bicarbonate or baking soda, How many grams of baking soda are present in the sample?

Identify a matrix for hiring appropriately trained personnel : Identify a matrix for hiring appropriately trained personnel and create a company policy to address issues and concerns of privacy in intelligence gathering and surveillance.

Define ammonium phosphate and aqueous calcium choloride : Balance the chemical equation when aqueous ammonium phosphate and aqueous calcium choloride are mixed. What is the sum of the coefficeints?

Define the relevant and irrelevant costs : Two partners who own Progressive Business Solutions, which currently operates out of an office in a small town near Boston, just discovered a vacancy in an office building in downtown Boston

How does a budget affect a security plan : How does a budget affect a security plan? If you were provided a limited budge, what components do you feel are most critical to include in a security plan? Explain

Compute the heat flow and work and entropy : Calculate the volume change associated with the adiabatic expansion b) Calculate the heat flow, work and entropy

How would the elimination of the automobile affect social : How would the elimination of the automobile affect social, cultural and economic arrangements in American society and what adjustments would Americans have to make to effectively function in an automobile-free society?

How would police carry out duties : What are some leadership responsibilities of the police in preparing a community for the possibility of a terrorist attack? How would police carry out their duties?

User Account

All Pages