Question

pls i need help with this, professor already reject a lot

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

a. The cost of production when determining whether to continue to manufacture the screen for a smartphone or to purchase it from an outside supplier​ (old equipment will be sold if new equipment is​ purchased). Relevant Irrelevant Relevant because the differential costs will be considered in making the decision the company would have to lay off workers if they purchased them the differential costs will be considered in making the decision the sunk costs will be considered in making the decision b.  The cost of land when determining where to build a new call center ▼ Irrelevant Relevant because ▼ the cost of land has nothing to do with the construction of a call center the cost of land is not part of the investment needed to build the new call center the cost of land is part of the investment needed to build the new call center and differs among the various parcels examined c.  The average cost of vehicle operation when purchasing a new delivery van ▼ Irrelevant Relevant because ▼ the average cost does not affect the new delivery van as its cost is below average the costs of operation of various vehicles does not vary the costs of operation of various vehicles may vary with the make and model chosen d. Real estate property tax rates when selecting the location for a new order processing center ▼ Irrelevant Relevant because ▼ differing property taxes will affect the costs of occupancy differing property taxes will not affect the costs of occupancy property taxes do not differ from location to location e. The purchase price of the old computer when replacing it with a new computer with improved features. ▼ Irrelevant Relevant because ▼ the cost of the old computer is a sunk and therefore past cost the cost of the old computer was less than that of the new computer the cost of the old computer was more than that of the new computer the improved features are worth the increased price f. The cost of renovations when deciding whether to build a new office building or to renovate the existing office building. ▼ Irrelevant Relevant because ▼ the costs are differential the costs are sunk the costs are the same g. The original cost of the current stove when selecting a​ new, more efficient stove for a restaurant ▼ Irrelevant Relevant because ▼ the cost of the new stove is less than that of the current stove the cost of the current stove is a differential cost in the selection of the new stove and not a sunk cost the cost of the current stove is a sunk cost and not a differential cost in the selection of the new stove h. Local tax incentives when selecting the location of a new office complex for a​ company's headquarters Irrelevant Irrelevant Relevant because ▼ the tax incentives are the same from locale to locale therefore will not affect the costs of occupancy the tax incentives will vary from locale to locale and will affect the costs of occupancy for the office there are no local tax incentives i.  The fair market value​ (trade-in value) of the existing forklift when deciding whether to replace it with a​ new, more efficient model Relevant Irrelevant Relevant because ▼ the fair market value is a differential cost in the selection of a new forklift and not a sunk cost the fair market value is a fixed cost and is therefore irrelevant the fair market value is irrelevant as it is a sunk cost j.  Fuel economy when purchasing new trucks for the delivery fleet Relevant Irrelevant Relevant because the miles per gallon of a vehicle affect the fixed costs of operation the miles per gallon have no affect on the costs of operation the miles per gallon of a vehicle affect the fixed costs of operation the miles per gallon of a vehicle are a determinant of the variable costs of operation Click to select your answer(s).

Answer 1

a. Relevant : as if we buy from outside, there will be no Material, labour and other production cost. So relevant while taking Make or Buy decision.
b. Irrelavant if we already have the Land. In that case it will be Sunk cost. But if we need to purchase the new land for call centre than it will be relevant for our decistion.
c. Relevant : as while taking decision to purchase a new vehilce. One need to consider the differencial operating cost with the old one.
d. Relevant : Property Tax is different for each location. So while selecting a location for order processing center, one need to consider the same.
e. Irrelavant : the purchase price of old computer is a sunk cost and will not be considered while purchasing new computer
f. Relevant : as while taking decision to build a new building, one need to consider and compare the differential costing of renovating the old building
g. Irrelavant : the original cost of old stovev is a sunk cost and will not be part of decision making.
h. Relevant: because Local Tax incentive differs from place to place. So while selecting location of Headquarter will be relevant
i. Relevant : because if one is going to buy a new forklift, he needs to sell the old one. So fair market value will be the part of his decision making.
j. Relevant : because fuel economy is directly related to operations of truck and it’s a variable cost so relevant for decision making.