Identifying Relevant and Irrelevant CostsThe local summer baseball league wants to buy new...

Identifying Relevant and Irrelevant Costs

The local summer baseball league wants to buy new uniforms for its teams. The current uniforms are quite old and will require $400 in repairs before they can be handed out to players next week for the upcoming season. The old uniforms will be replaced as soon as new ones can be purchased. League leaders have investigated several possible fund-raisers and have narrowed the choice to two options: candy sales and car washes. Each option can generate the $2,500 that the new uniforms would cost.

Option 1:

The candy sales option would require the league to purchase 2,000 candy bars at a cost of $0.75 each. The players and coaches would then sell the bars for $2.00 each. The league estimates that it would take about four weeks to sell the candy and collect all of the money.

Option 2:

The car wash option would require about $200 for buckets, sponges, soap, and towels. A local business has offered to donate the water (estimated at $300 total) and a location. The car washes would be held on Saturdays, and each team would be required to provide workers. Each car wash day is expected to generate $450 in proceeds, so the league expects that it would take six weeks to raise $2,500.

Required:

1.Several factors related to the league’s choice follow. Indicate whether each factor is relevant or irrelevant to deciding which project to engage in and briefly explain your reason.

(a) Repair costs for the old uniforms, $400.

(b) Initial outlay to purchase the candy bars, $1,500.

(c) Initial outlay to purchase car wash supplies, $200.

(d) Cost of water for the car wash option, $300.

(e) Cost of the new uniforms, $2,500.

(f) Additional two weeks that the car wash option would require to raise the money.

2.List three qualitative factors that the league should consider in making its choice.