Reference no: EM131210712
The costs listed below relate to a variety of different decision situations.
Cost Decision
1. Unavoidable fixed overhead Eliminate an unprofitable segment
2. Direct labor Make or buy
3. Original cost of old equipment Equipment replacement
4. Joint production costs Sell or process further
5. Opportunity cost Accepting a special order
6. Segment manager's salary Eliminate an unprofitable segment. Manager will be terminated.
7. Cost of new equipment Equipment replacement
8. Incremental production costs Sell or process further
9. Direct materials Equipment replacement. The amount of materials required does not change.
10. Rent expense Purchase or lease a building
Instructions
For each cost listed above, indicate if it is relevant or not to the related decision. For those costs determined to be irrelevant, briefly explain why.
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