Question

Page 1: Which of the following is irrelevant when deciding to upgrade a company's heating and air conditioning system? 1 2 3 > a) the productivity of the old equipment compared to that of the new equipment 5 b) the safety of the new equipment compared to the old equipment 7 8 9 c) the purchase price of the old equipment compared to the purchase price of the new equipment 10 11 12 d) the energy efficiency of the old equipment versus the energy efficiency of the new equipment 13 14 15 16 17 18 19 20 21 Question 14 (Mandatory) (5 points) In a make or buy decision, the costs involved in buying will include: a) The charge from the vendor, plus the depreciation of any equipment you were unable to sell when making the change from making to buying. Oь) All of your manufacturing overhead, since it did not change when you decided to buy c) The charge from the vendor for the product. MacBook Air

Answer 1

Question 1:-

The correct answer for the question is Option C - The purchase price of the old equipment compared to the purchase price of the new equipment. The purchase price of the old equipment is a sunk cost and is not relevant in deciding to purchase the new equipement. Sunk costs are generally irrelevant in making replace or continue decisions because they are already spent and cannot be recovered. Hence, this is the correct answer.

Option A is incorrect. The productivity of the equipments is an important decision to be considered as investing in the new equipment should provide better/improved productivity for the business to be conclusive.

Option B is incorrect. The safety factor along with few other quality factors play a crucial role in deciding whether to continue or replace the equipment.

Option D is incorrect. The energy efficiency of the old equipment to that of the new equipment plays a role in deciding whether to buy the equipment or not. Hence, this is not the correct option.

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